If you have also bought a property in the financial year 2022-23 and have paid Stamp Duty or Registration Fee, then you are entitled to Tax Exemption. Under Section 80C of Income Tax, a maximum deduction of Rs 1.5 lakh can be availed on the payment of stamp duty, registration fee etc.
But, to take advantage of this discount, you have to fulfill certain terms and conditions. People paying stamp duty and registration charges under section 80C can claim exemption while filing Income Tax Return (ITR) in the year in which they buy the house.
Tax exemption on stamp duty can be claimed by individual owners, co-owners or Hindu undivided families. In case of joint ownership, exemption is given to the co-owners according to their share. For this, it is mandatory for the property to be registered in the name of all the owners and stamp duty has to be paid by them. If someone other than the co-owners of the property pays the stamp duty, then the benefit of tax deduction will not be available to the co-owners of the property.
Exemption only on residential property
Section 80C (xviii) (d) of the Indian Income Tax Act, 1961 provides for tax exemption on expenses such as stamp duty and registration fees incurred on the purchase or transfer of property. Under this, a deduction of up to Rs 1.5 lakh can be claimed. It is to be noted here that this exemption can be availed only on residential property and not on commercial property.
Tax exemption on stamp duty paid in the same financial year
can be availed in the same financial year for which ITR is being filed. This means that while filing ITR for the financial year 2022-23, you can claim exemption only on the stop duty paid in this financial year and not for the house purchased in the previous financial year.
Occupancy required
You can claim exemption on stamp duty paid only for the residential property which is in your possession as the first owner. That is, you should have possession of the property. Under-construction properties are not eligible for stamp duty tax benefits.
Lock-in period of 5 years
The property for which Tax Benefits on Stamp Duty has been availed for the purchase cannot be sold for five years. If one sells the property before this period, then the ITR of the year in which the exemption is availed gets revised and the stamp duty deducted is taxed.
This is also a condition , for tax deduction on applicable stamp duty, it is also necessary that you have not crossed the maximum exemption limit of 1.5 lakhs under section 80C. This means that if you have already taken exemption up to 1.5 lakhs on investments in EPF, PPF, SCSS, life insurance policy, ELSS etc.,
then you cannot claim tax exemption on stamp duty. If you have availed less than 1.5 lakhs exemption after claiming the deduction on these investment options, then you are entitled to tax deduction on stamp duty also.
