Tax Benefit On Stamp Duty & Registration Charges Of Property

Under section 80C, stamp duty charges paid on registration of a property can be claimed as a deduction. Up to Rs. 1.5 lakhs can be claimed as deduction under the old regime. This deduction is not available under the new regime. Also, if the property is sold within 5 years of purchase, the deduction already claimed is withdrawn and tax needs to be paid on the deduction, on the year of sale. In this article, we will learn in detail about the deductions available for stamp duty and registration charges of property.

When Can You Claim Deduction?

• This deduction can only be claimed in the year the actual payment is made towards these expenses. 

For example, if you buy the property on 30th August 2024 and pay its stamp duty and registration charge, you can claim these expenses under section 80C only in FY 2024-25.

• Deduction under this section is available only for a new residential property & not commercial property. 
• Both an individual and a HUF can claim this deduction in the income tax return. 
• This deduction can be claimed only if you have opted for the old tax regime. If you have opted for a new tax regime, then you are not eligible to claim this deduction.

What Expenses Cannot Be Claimed as Deduction?

• Admission fees, cost of share, and the initial deposit that a company's shareholder or co-operative society member pays to become a shareholder or member are included.
• The cost of addition, alteration, or renovation that is done after getting a certificate of completion or after the house has been occupied by the buyer or let out.
• Deduction under this section is available only for a new residential property & not commercial property or resale property.
• Residential plots or land also do not qualify for claiming deduction under section 80C

Joint Owners

• If you have purchased the property jointly, the co-owners can claim these expenses in their respective income tax returns based on their share in the property. 
• Each of the co-owner can exhaust their limit of Rs. 1.5 lakhs under section 80C shall apply.

Where Can I Claim a Deduction in the ITR Form?

• In Schedule VI-A, under Section 80C, you can claim a deduction on Stamp duty and registration charges paid at the time of purchase of house property. 
• In Form - ITR-1 and 4, the details are found under the schedule  - PART-C, ‘Deductions and Taxable Total Income’.
• This year, drop down options are available in the income tax utility -  in which entering of document reference number is mandatory to claim any deduction.

To claim this tax benefit, you must not sell the property in its lock-in period, which is five years. If you sell the property before five years, this tax benefit is reversed, and the deduction claimed earlier will be payable.