Tax Savings from Stamp Duty and Registration Charges
Buying a home can be a difficult and tedious task. Thankfully for all the money one spends or borrows in terms of a home loan for buying the property, there are some tax rebates that can ease the overall tax liability of the individual. In case of a home loan, the principal amount paid as EMI is exempted for tax under Section 80C of the income tax Act. On the other hand, the amount paid as interest towards repayment of home loans up to a maximum of Rs 1, 50,000 is available for tax deduction under Section 24(b). Buying a home involves a lot of other expenses especially stamp duty and registration charges. As per the income tax act of 1961, one can claim deduction for stamp duty and registration expenses paid within the overall limit of Rs. 1 Lakh under Section 80C of the income tax act. Let us take a look at how tax saving from stamp duty and registration charges work and its various conditions.
Understanding Stamp Duty and Registration Charges as Deduction:
As per Section 80C of Income tax Act, 1961, one can claim tax concession on stamp duty and registration charges on residential property up to Rs. 1, 00,000. The above however comes with certain preconditions. The tax deduction is allowed only and only if such expenses have been made in respect of a new house or property. Also the amount of such stamp duty or registration charges should have necessarily been paid in the previous financial year. Any expenses done incurred later than the previous financial year would not be eligible for tax deduction.
Example: Suppose Rahul purchased a new flat worth Rs 40 Lakhs and spent a sum total of Rs 4, 00,000 towards stamp duty and registration charges. Rahul would be eligible to claim any tax concession during the assessment year of 2014-15 if and only if the expenses have been incurred in the immediate previous financial year that is 2014-15 and not earlier.
Other Important Things to Consider:
Tax deduction under Section 80c of the income tax act of 1961 for the amount spent on stamp duty expenses and other registration charges can be availed only by the assesse himself or herself. Any other family member residing in the same property is not eligible to claim the tax deductions. The claim for any such tax deduction is allowed only after getting the full and final possession of the property. Under construction property is not eligible for any tax deduction on stamp duty and registration charges. The maximum limit of the deduction is fixed at Rs. 1, 00,000 under Section 80c. The deduction is available only and only for a new residential property and not for any commercial property. Another important point to note before filling for any tax deduction is that the house in question must not be a resold property or a property in which someone has stayed previously.
