Two dimensional layered magnetic materials like Fe‐doped SnS2 are cheap, abundant, and biocompatible, used for spintronics applications. The hydrothermal synthesized hexagonal nano disc structure of the sample is seen in the SEM images at room temperature. Pure SnS2, which is diamagnetic with magnetization 0.02067 emu/g becomes soft ferromagnetic by 2.5 % Fe doping with 0.672 emug−1 saturation magnetization and 0.222 kOe coercivity. A ultraviolet‐visible spectrometer measurement of the energy bandgap reveals a drop in energy from 2.35 to 2.2 eV, and the PL spectrum displays intense blue emission at a wavelength of 482–484 nm. Maximum entropy method (MEM), confirmed the ionic to covalent conversion upon Fe doping, due to the residual charge accumulation at the intermediate regions. The electron densities in Fe doped system in the plane (023) at Bond Critical Point of Sn─S and S─S are 0.327 and 0.354 e Å−3, respectively, with negative total energy density values confirming covalent bonding. A high electron density of 0.856 e Å−3 at the Sn─Sn region confirms interstitial charge accumulation. This introduces new intermediate energy levels in the forbidden region, reducing the energy bandgap and making the substance more semiconducting, making it useful for optical, opto‐electronic, and half‐metal applications.