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New Delhi. Property is also a popular means of investment in India. Every year property prices increase significantly. That's why many people buy a house, shop or plot. As per the provisions of the Income Tax Act, 1960, you are also entitled to tax exemption on stamp duty or registration fees paid for registration of property. Under Section 80C of the Income Tax Act, a maximum deduction of Rs 1.5 lakh can be availed on payment of stamp duty, registration fee etc. People paying stamp duty and registration fees under Section 80C can claim exemption while filing income tax returns (ITR). In the year of purchase of the house.
Under section 80C(xviii)(d) of the Indian Income Tax Act, 1961, tax exemption on expenditure incurred on purchase or transfer of property such as stamp duty and registration charges can be availed only on residential property and not on commercial property. . , , Therefore, if you want exemption up to Rs 1.5 lakh then it is important for you to buy a residential property.
Who can claim exemption
Tax exemption on stamp duty can be claimed by individual owners, co-owners or Hindu undivided families. In case of joint ownership, co-owners are exempted according to their share. For this, it is mandatory for the property to be registered in the name of all the owners and for them to pay stamp duty. If someone other than the co-owner of the property pays the stamp duty, the co-owners of the property will not get the benefit of tax deduction.
It is necessary to fulfill this condition
Tax exemption on stamp duty can be availed in the same financial year in which the ITR is being filed. This means that while filing ITR for FY 2023-24 you can only claim exemption on stop duty paid in this financial year and not for a house purchased in the previous financial year.
possession required
You can claim exemption on stamp duty paid only for a residential property that is owned by you as the first owner. That means you should be in possession of the property. Properties under construction are not eligible for stamp duty tax benefits.
Lock in period of 5 years
The property on purchase of which tax exemption on stamp duty has been availed cannot be sold for five years. If one sells the property before this period, the ITR of the year in which the exemption is taken is revised and the stamp duty deducted is taxed.
This condition also applies
For tax deduction on stamp duty, it is also necessary that you have not crossed the maximum exemption limit of Rs 1.5 lakh under Section 80C. This means that you cannot claim tax exemption on stamp duty if you have already availed exemption up to Rs 1.5 lakh on investments in EPF, PPF, SCSS, life insurance policies, ELSS etc. If you have availed exemption less than Rs 1.5 lakh even after claiming deduction on these investment options, you are entitled to tax deduction on stamp duty also.