In a recent update, individuals who purchased a property in the fiscal year 2022-23 and paid stamp duty and registration fees can now claim a deduction under Section 80C of the Income Tax Act. This deduction opportunity is available when filing the Income Tax Return for the assessment year 2023-24. Under Section 80C, individuals can claim a maximum deduction of Rs 1.5 lakh for expenses related to stamp duty, registration fees, and other charges associated with the acquisition or transfer of a residential property.
Details
It is important to note that this deduction is only applicable for residential properties and not commercial properties. Additionally, there is a mandatory lock-in period of 5 years, which means that individuals who claim this deduction cannot sell the property within this period.
Understand with an example
To provide clarity, let’s consider an example: If an individual has paid Rs 5 lakh as stamp duty and registration charges in the fiscal year 2022-23, they can claim a deduction of up to Rs 1.5 lakh when filing their Income Tax Return for the assessment year 2023-24. The remaining amount of Rs 3.5 lakh cannot be claimed as a deduction.
It is crucial to ensure that the total deductions claimed under Section 80C, including the deduction for stamp duty and registration fees, do not exceed the overall limit of Rs 1.5 lakh. This limit should account for other tax-saving instruments such as EPF, PPF, SCSS, Life Insurance Policy, ELSS, etc. If the individual has already utilized the entire limit through other schemes, they cannot claim an additional deduction for stamp duty or registration fees.
Furthermore, carrying forward any unused deduction to subsequent years is impossible. Even if an individual claims a deduction of Rs 1.5 lakh for stamp duty and registration fees, they cannot claim a deduction for the remaining Rs 3.5 lakh in the following years. Section 80C does not allow for the carry-forward of this deduction benefit.
In conclusion, individuals who purchased a property in the fiscal year 2022-23 and have paid stamp duty and registration fees can now claim a maximum deduction of Rs 1.5 lakh under Section 80C. However, it is essential to consider the overall limit of Rs 1.5 lakh, fulfil the lock-in period of 5 years, and note that any unused deduction cannot be carried forward to subsequent years.