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Stamp duty and registration charges in India?

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Suppose a buyer and seller get into a sale and purchase of the property. For the sale deed, they must register it in India and pay stamp duty and registration charges.

What is Stamp Duty Refund Process when the Sales Deed is canceled? - Kotak Bank

Who collects Stamp duty and registration charges in India?  

  1. As per the Indian Stamp Act 1899 the state government collects Stamp Duty and not the central government. It is different in different states. The state government uses it for building the state’s infrastructure.
  2. Stamp Duty varies with the type of housing and the state in which it is located, and it also varies with the gender of the buyer, and senior citizens get a rebate on registration charges.

Benefits of Stamp duty

  1. Registering a stamp duty makes the sale deed a proper legal document and makes it possible to submit the deed to the court as evidence. In case the document is lost, a duplicate copy can be produced. The buyer has to pay stamp duty at the time of registration.
  2. The buyer generally pays Stamp Duty

Stamp duty in Real Estate?  

Stamp duty in Real estate is on Sale deed, Partition Deed, and Lease Deed. If a lease deed is more than 12 months, it must be registered and pay stamp duty, otherwise, generally, lease deeds are for 11 months. Therefore, which means the document of the property is verified by a notary declaring the authenticity of both parties signing the documents.

Delhi Stamp duty

  1. Delhi Stamp Duty charge has been going on since the year 1908, which is a retardation charge.
  2. Like in Delhi, stamp duty is 6% if a property is registered in a Male’s name, 4% if in a female’s name, and 5% if in joint name. This is in case the property value is less than 10 lakh rupees. But if it is more than 10 lakhs rupees, both males and females pay equal stamp duty.
  3. The Registration charge is 1% of the property value.
OwnerStamp Duty
Male6%
Female4%
Joint (Male& Female)5%

How to pay Stamp duty?

The 3 methods to pay a stamp duty are as follows:

Method 1 –

Non-Judicial stamp paper. If stamp duty is 1 lakh, buy papers worth Rs 1 lakh. You will print the sale deed on stamp paper.

Method 2 –

Franking method – Print the sale deed on plain paper. Pay stamp duty in a cheque, cash, online, or dd draft. Then bank attests to the sale deed.

Method 3 –

E-Stamping – it will mention all details – generated online – Go to Stock holding corporation of India – www.shcilestamp.com. This will be paid at authorized centers. Collect e-stamp then.

Other Charges When Buying a House

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When you start your property search, you will be amazed by the extra charges involved in buying a house or investing in property. There are two options: buying a ready-to-move-in property or an under-construction property. However, most people prefer to buy a ready-to-move-in property because it is less risky than an under-construction one. So, let’s assume that a property is coated at Rs. 3000 per square feet—this is its basic rate—but there are also other charges on top of that which people often fail to consider and which can be more than 40% to 50%. Let’s discuss all the additional charges so that you can make an informed decision about the total price of any given property before agreeing to purchase it.

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Let’s look at an example:

Suppose a property’s basic price rate is Rs. 45 lakhs. When we make the final payment for this property, it will be around Rs. 58 – 67.5 lakhs—which includes the basic price of the property and the extra other charges when you buying a house. We will discuss all these charges in detail below:

First comes the basic charge. It is the charge excluding all the extra charges. Before RERA Act came into force, properties used to be sold on the super built-up areas; after the enactment of the RERA Act, properties are supposed to be sold based on the carpet area. For example, if the property has a carpet area of 1500 square feet and the rate per square feet is Rs. 3000, then its total basic cost would be Rs. 45 lakh. And this is just the basic cost; you will also have to pay multiple charges on it, as mentioned below.

PLC (PREFERENTIAL LOCATION CHARGES) –

Property taxes are charged according to the property’s location. Like; a corner flat, park-facing, sea-facing, lower floors, or higher floors. For example, sea-facing view residences have higher PLC charges than non-sea-facing. Therefore, if you own any such property there is a PLC charge coated. Generally, PLC charges are Rs 150-200 per square feet.


PARKING CHARGES –

When you purchase a property, you will pay a parking fee of 5-7% of the base price of the flat. For example, if you purchase a property for Rs. 45 lakhs, you will be charged Rs. 2 to 2.5 lakhs for the parking facility.

INFRASTRUCTURE DEVELOPMENT CHARGES (IDC) –

An infrastructure charge usually consists of complete internal infrastructure within a complex. For example, water and electricity supply, as well as sewage treatment plants may be charged separately. Developers usually charge these services together because it costs less to do so. However, if we add them together in one place according to IDC’s input-demand curve, there will be an IDC charge added at around 6% of the base price of the flat or house.

EXTERNAL DEVELOPMENT CHARGES (EDC) –

In some cities, there is also an external development charge. For example, in Gurgaon and Faridabad. This charge goes to the government and includes the infrastructure of a complex—for instance; road facilities, sewage, water, and electricity. The EDC charges are applied to all these expenses so it is approx. 5% of the base price of a flat. The total cost of IDC and EDC ranges from Rs. 300 to 400 per square foot.

CORPUS FUND/ IFMS –

Builders collect corpus funds, also called IFMS. It is interest-free maintenance security, similar to an emergency fund, and not like regular monthly maintenance. To purchase a property costing Rs. 45 lakhs, builders can collect from Rs. 50,000 to Rs. 1,00,000.

POWER BACK-UP –

The power backup charge is provided on an kWh-basis for each flat in the complex. Backup is available from 3KVA to 5KVA, ranging from 1 lakh to 1.5 lakhs.

AMENITIES AND CLUB CHARGE –

These charges apply to luxury flats with a clubhouse, swimming pool, and gym. The developer will charge you for these amenities at a lump sum of Rs. 50,000 to Rs. 1.5 lakhs.

STAMP DUTY AND REGISTRATION CHARGES –

In this case, stamp duty varies from state to state. So you must pay the stamp duty according to the state. Therefore, stamp duty and registration charges are 5-10% of the property value.

GST –

In an under-constructed property, both stamp duty and GST are levied where GST is 18% on ⅔ of the property cost. Therefore, the effective GST rate is 12%. It is the payable tax and added as a extra other charges before buying a house.


BROKERAGE –

Most resale property or ready-to-move-in property transactions are closed through a real estate agent or broker, who typically charges 1% to 2% of the property’s final value as a fee.

Process of Property Registration

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We’ll discuss some of the main points on the entire process of registration of a property in India. Although this process is quite complex, it may require a lot of time and effort by the registry office to complete. So let’s start the process of registering a property in India with propertywala.

Karnataka Property Registration - Procedure and Charges - IndiaFilings

STEPS OF PROPERTY REGISTRATION IN INDIA:

  1. The first step is to choose the property and look for all the details in the property. Negotiate with the seller. Pay 10% booking amount. Then we have an agreement to sell.
  2. Buyers should check that there are no liens or other encumbrances on the property before they make an offer.
  3. Calculate Stamp Duty. Stamp Duty is the tax levied on the transfer of real property in the state. Stamp duty rates vary from state to state. It’s calculated either on the circle rate or on the market rate, whichever is higher. It’s generally 3-10% of the property value and 1% is the registration charge.
  4. There are three methods for paying stamp duty, as follows:
    1. Method 1 – Non-Judicial stamp paper (picture). If stamp duty is Rs. 1 lakh, buy papers worth Rs 1 lakh, where sale deed will be printed on an official stamp paper.
    2. Method 2 – Franking method – Print the sale deed on plain paper. Pay stamp duty in the cheque, cash, online, or DD draft. Then the bank attests to the sale deed.
    3. Method 3 – E-Stamping (picture) – it will mention all details – generated online – Go to Stock holding corporation of India – www.shcilestamp.com. Payment will be made only at authorized centers. Collect e-stamp then.

HOW TO CALCULATE STAMP DUTY:

Now, buyers should also be aware of the Stamp duty calculation. They should also know that this tax is payable when they register their property.

For example, if the actual value is Rs. 40 lakhs and the circle rate is Rs. 50 lakhs, then you have to pay stamp duty at the highest rate out of the two. Hence, in this example, because the circle rate is greater than the actual rate then you have to pay a stamp duty of Rs. 50 lakhs.

And in another case, let’s assume that you bought a property in India with a market value of Rs 90 lakhs and the circle rate was Rs 80 lakhs. In this case, you would have to pay a stamp duty of Rs 90 lakhs. Therefore, you can calculate your stamp duty. In addition, you can also estimate stamp duty online because it varies differently and is higher in large cities and towns than in small towns or cities.

5. The next thing is a draft and print sale deed or conveyance deed, or gift deed. It mentions all details like name, address, age of both the buyer and seller, etc. It provides details about payment, including through cheque, cash, or any other method. After that, you have to print the sale deed on stamp paper and then sign each page of the sale deed. Two witnesses also have to sign the last page of the sale deed.

6. After drafting and printing the sale deed, you must register it at the sub-registrar office. The office should be located in a fixed zone of your property’s locality. To schedule an appointment online or to obtain a token number, contact the sub-registrar office by phone or in writing. Both buyer and seller should attend the registration; witnesses should be present as well. If either of them cannot attend, they must appoint someone to act on their behalf with power of attorney. All parties should bring documents such as an Aadhaar card and an identity document. Three photographs will be attached to the sale deed, and both buyers and sellers will be asked to sign their names in the presence of a sub-registrar. Fingerprints will also be taken for security purposes.

7. After that, you have to collect the registered sale deed. The deed can be collected within 15-20 days. If you took a bank loan, the bank will collect the original deed.

8. Now that the registration process is over and the property transfer is complete, you need to change the name in the land records. This process is called a mutation. If your property is located in a rural area or outside municipal limits, you will have to change the name in land records. The mutation has different names in different states. For example Jamabandi in Haryana, Punjab, and Rajasthan; Khatauni in Uttar Pradesh; 7/12 in Gujarat and Maharashtra; and Khatian in Orissa, West Bengal, and Bihar. After you register your property, the whole process of registration of your property is completed.

4 ways to legally save on property registration charges

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4 ways to legally save on property registration charges – Techtends

The property registration charge, which usually on average ranges between 5-10%, frequently eats up a substantial part of a home buyer’s budget. Buying a home is everyone’s dream but, with a lack of money, it is impossible to get a dream home. If you succeed in saving any part of the charge, it will save money and help in raising your home-buying budget. It will also boost your interior budget, reducing your home loan outstanding or utilizing it any other way you prefer. Below is the list of 4 ways to legally save on property registration charges.

By appealing to the registrar/sub-registrar, a way of legally saving on property registration charges:

Stamp duty and registration rates are to be calculated on the actual transaction price. When the market prices change at periodic intervals, the government keeps on revising the circle rate. This has happened many times in the recent past when the market rate was less than the circle rate. When the market rate is less and paying the stamp duty at a higher circle rate puts a buyer at loss. However, there is a way you can save on stamp duty because not many buyers are aware. Under the state stamp act, they can appeal to the sub-registrar for conviction of market value.

Registration at undivided share:

The purchase of undivided shares is widespread in the land aggregation process. When the buyer signs two agreements with the builder – the sale agreement and the construction agreement. The sale agreement is for undivided shares (UDS) in property, i.e. the buyer’s share only in the common area. A specified share would be required to be crystalized by going for metes and bound partition for any utilization. Hence, the registration of a construction agreement is not compulsory in every state; it is only possible where the agreement is not compulsory. In some states such as Tamil Nadu, it is mandatory to register both a sale agreement and a construction agreement.

Rebate for female buyers:

If joint/individual purchases by women, many states, including Haryana, Delhi, Punjab, Rajasthan, and UP offer a discount on stamp duty charges. The Delhi government’s official website states, the stamp duty rate is 4% for women and 6% for male buyers.

Local stamp act:

Although rules vary from state to state, it’s reproving to review the local stamp act / hire a professional to do the job. The cost of the property can occasionally be reduced by state regulations, which sometimes, state rules are such that you can save on property registration charges.

In Maharashtra, most clients don’t know if they sell the property within one year of buying from a developer, the property registration charges are applicable only to the net profit. On the property, if gifted to a blood relative, no need to pay stamp duty. For Example, Maharashtra, Punjab, and Uttar Pradesh.

Stamp duty reduced by 2% on flats priced below Rs 45 lakh

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On Monday the State Legislative Assembly approved an amendment to the Revenue Stamps Act of 1957 that significantly reduced the stamp duty on apartments valued from Rs 35 to 45 lakhs to 3%. However, the 2% discount only applies to the first registration, in other words to the first sale.

R. Ashoka, Revenue Minister said hundreds of thousands of apartments in Bangalore and other cities remained unsold due to the problem caused by the Covid-19 pandemic. Reducing the stamp duty will help both the real estate sector, which is struggling with large holdings, and families from low-income groups.

The bill anticipates the statement from B.S. Yediyurappa when the budget was presented as chief minister in March this year.

Last December, the government amended the law to introduce a 3% exemption on apartments valued between Rs 20 lakhs and 35 lakhs. In its budget last year, Yediyurappa significantly reduced stamp duty on new apartments at prices below Rs 20 lakhs to 2%.

M.B. Patil, a Senior member from Congress, requested the government to make more concessions on Maharashtra lines, lowering stamp duties regardless of price.

Members of Congress DK Shivakumar and Ramesh Kumar and member of JD (S) SR Mahesh called on the government to help people build houses within this budget on their plots of land.

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CREDAI-MCHI urges Maharashtra Government to cut stamp duty to 2%

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Real estate association CREDAI-MCHI on Tuesday requested the Maharashtra government to cut the stamp duty to 2 percent in Mumbai to revive housing demand amid the COVID-19 pandemic.

The association wrote separate letters to Udhav Thackeray, Chief Minister of Maharashtra, Ajit Pawar, Minister of Finance, and Balasaheb Thorat. Deputy Chief Minister of Maharashtra and Minister of Revenue of Maharashtra.

Drastic reduction in stamp duty collection

In September 2020, the Maharashtra government announced a 2-3 percent reduction in stamp duty. The exemption became ineffective in March this year.
In support of its claim, the association cited a slowdown in housing sales and a sharp reduction in stamp duty collection for the state government.

CREDAI MCHI, which has more than 1,800 developer members, has asked the state government to reduce stamp duty to 2 percent in Mumbai by March 2022. In addition, authorities said the downward trend will continue and many potential buyers are hesitating due to higher transaction costs.

The industry authority noted that the decision to reduce stamp duty in August 2020 has helped the sector incredibly.
However, the decision not to renew the stamp duty refund after March and the outbreak of another wave has led to extremely low-key sentiment from home buyers. Revenue collection for the authorities has also fallen. Property registration and stamp duty collection fell by 70 percent in May compared to March.

Low inquiries since past few months!

Deepak Horadia, president of CREDAI-MCHI, said, the association has called for an extension of the cut beyond March. So that the momentum of this industrial and economic revival does not fade. “However, we have seen a strong downward trend in inquiries and sales in recent months. Which not only hampers the sustained progress made in the real estate sector but also the more than 250 aid industries that come into play. Goradia said the state government should be aware of the need to return stamp duty reduction. So to regain the confidence of home buyers as well as increase its own revenue collection.

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VAT increased in Kerala, worries realty sector

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Increase in the Value added tax (VAT) may affect the real estate sector adversely. Industry experts stated that increase in VAT would result in materials for construction.

The Kerala Budget 2013 proposes an increase in VAT.

The Kerala Budget 2013 proposes an increase in VAT.

It is true that the budget 2013 has not done any indirect harm to the realty sector. The budget, though did not help the sector, cannot be termed as unfriendly to the real estate sector. However the realty players in the state fear that the proposed increase in VAT would affect the realty sector.

The prices for cement, wood and paint are likely to go up with the proposal to increase VAT. The prices of the above mentioned items are directly related to construction. So in short the prices of the raw materials will have an impact on the property prices too. The property prices will shoot up proportionately.

The budget 2013 has proposed an increase of 1.5% of VAT. This will directly affect the prices of the raw materials used for construction. Continue reading →

Maharashtra Govt. nods e-payment of stamp duty

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Renovating the entire stamp duty collection system, Maharashtra Government has approved e-payment of stamp duty.

Maharashtra govt decides to go online for property tax payment

Maharashtra govt decides to go online for property tax payment.

Property transactions will be easier in Maharashtra now. And you will have more convenience on moving around from office to office, one to the other. All this will be possible in Maharashtra where the government has decided to accept e-payment of stamp duty.

To pay stamp duty for your property transactions, you may soon be spared of doing the rounds of multiple offices.

Under the new model, the stamp duty for property transactions will be collected by authorized banks. With the approval the buyers will be able to pay the property tax in the bank counter.

Under the new system, the buyer, or the one who needs to pay the property tax, can pay the property tax in the bank. However this new system is applicable only for the sum over Rs.5000.

Property deals will be easier in Maharashtra with online tax payment

Property deals will be easier in Maharashtra with online tax payment

Once the stamp duty is paid with the bank officer who collects the amount, the officer will return a digital bill to the payer. The bill, known as Electronic Secure Bank and Treasury Receipt (eSBTR), will look like a stamp paper. Moreover it works as a stamp paper.

While the payment is made, the customer has to provide all details related to the property transactions to the bank officer who will feed all the given details in to an online database.

The digital bill or the e-receipt is expected to be more secure than traditional stamp papers. It is the main difference between the two. Traditional stamp papers are more viable to falsifying.

Making it more secure, the category of the paper used for the receipt also will be entered in the database. So it will be easier for the officials to track the receipts and identify whether the produced receipt is fake or original.

The new system of paying property tax through banks will be first initiated in Mumbai and will be followed by Pune. The new system will be introduced in other cities afterwards.

Real Estate Rules Count Stamp Duty as Predominant

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About Real Estate Rules

Latest knowledge about various rules and regulations  in Real estate remain the most important factor for all smooth property dealings.The  knowledge about local rules at state as well as district level too, are equally important. If we enter into any kind of property dealings such as lease, rent, buy or exchange of a property without proper knowledge of Real estate rules, there are all the chance of being tricked/duped. Moreover,in future there can be number of legal troubles or hassles as well. So before buying a property one has to go through a number of Real estate rules to avoid all sorts of legal hassles. The knowledge about the dos and don’ts or the Real estate rules will enable one to avoid all such legal hassles certainly. Normally the buyer is supposed to pay the tax known as stamp duty when he or she tempts to buy homes or apartments. This is not the same in the case of property exchange where both the buyer and the seller share this tax. So let’s try to know more about stamp duty.
Continue reading →

Mumbai offers little hope for home buyers.

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In a recent report, Jones Lang LaSalle said that Mumbai seems to be in a tighter spot with Rs275 billion being sunk in land since FDI (foreign direct investment) was allowed in real estate in 2005; most of which has failed to yield returns. Even many investments done in South Bombay once named as one of the hottest and costliest property location in the world have met the same fate. Read Mumbai has sunk Rs275 billion in lands since 2005, the reason is known to all. Sky high prices have put off customers. In Mumbai, an average flat costs more than Rs10,000 per sq. ft. and even in Navi Mumbai, in less populated areas, there are many projects that have flats priced at over Rs1 crore.

Add to that the confusion created by the new DCR (development control rules). Many builders now have to make fresh plans to accommodate the proposed changes about FSI; and the worst affected are those whose projects are already underway. Many of the launches have been put on hold, and construction has been stalled in many places. And for people who have already invested in these projects, the longer the deadlock lasts, the more they have to pay.

Buy or not to buy? Despite a profusion of analyses and research reports on housing prices and their future direction, home buyers remain as confused as ever. So it is little wonder that 37 lakh of flats remain vacant in Maharashtra, of which 4.79 lakh are in Mumbai. The Census Directorate data says that even Thane district has more than 5 lakh vacant flats.

“Why doesn’t the government or RBI (Reserve Bank of India) understand that the more they squeeze liquidity by raising interest rates, it raises returns on black investments even higher. If our country can bring down black element out of property, rents will fall, property prices will fall,” said a commentator.

The home-buyer, however, is at a loss. The Budget came as a flop, and a recent Crisil report says that prices of steel and cement will go up, which will probably be passed down to the end-user. And then, there is the proposal to hike on leave-license, which is going to make rentals expensive. There are some who expect matters to improve.

Pankaj Kapoor, MD, Liases Foras also had echoed similar thoughts. “The high prices are not fault of only the builders. The hike in stamp duty was uncalled for and it is too revenue-centric and indicates a short term vision.” Read Maharashtra Stamp duty hike: “Neither can you afford to own a home, nor take it on rent”

However, as most experts say, one can buy a home any time. “You never know what will happen next. And honestly, there is little evidence to suggest that customers have waited for better home loan or price options when they have to buy a home—because it is a necessity. So if you want to own a home, there is no bad time,” said an analyst.

Order of Documents for Property Sale

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Essential Documents
The sale/purchase deed and the housing society share certificate are the major documents required while selling a property. Sale deed serve as confirmation for the land belonging to the seller only and he has full rights to sell the land. Some more documents such as NOC from the housing society, registered house documents and original copies of stamp duty are necessary. Also, the owner/owners have to submit documented consent if it is a joint ownership land.

Necessary clearances

The NOC from the society and title clearance are necessary, but they are not sufficient. The exact details of how old the building is, the carpet and built-up area, car parking status, the floor plan, land title (free hold/lease hold/collectors land), the conveyance of the society and transfer charges of the building and the apartment also have importance.