Are you Buying a property? Have you thought of Stamp Duty and Registration Charges? Getting the possession or ownership of the property can be tiresome and troublesome at times. Producing legal documents and paying heavy taxations can be burdensome in the light of justice. As Will Rogers said “Don’t wait to buy land, buy land and wait.“ This phenomenon encourages many people to invest and buy more of land as land being an indispensable factor of production and a rich asset.
The article below will highlight the depth of Stamp Duty and Registration charges, talking mainly about , What is stamp duty and registration charges? Which documents require Stamp duty? How to pay Stamp duty? How to calculate the Stamp duty charges? Difference between Circle rate and Market rate?
WHAT IS STAMP DUTY ?
Stamp Duty is a type of government tax incurred on legal documents and it is commonly charged when one individual is transferring the right of an asset or a property to another individual. The Indian Stamp Act of 1899 makes it a rule of collecting stamp duty and registration charges. The Central government plays no part in collecting and holding records for these stamp duty and registration charges whereas, The State government plays an crucial role in collecting the stamp duty. The rate of stamp duty and registration charges varies from one state to another. Generally the rate is (4%-10% of the property value) varying differently on the basis of whether it is a Sale Deed, Lease Deed or an Exchange Deed. Stamp Duty is paid during the time of execution mutually agreed by signing of the agreement.
What are REGISTRATION CHARGES?
Registration charges or fee is the amount that is charged by the court of law. The registration charges or fee is significant because it tells about the ownership being transferred from the Seller to the Buyer/Transferee. The registration charges are paid by the Buyer/Transferee usually 1% of the property value. For instance, Buyer X wants to buy a property from the Seller Z worth Rs 2 Crores. Seller Z will transfer the ownership right to the Buyer X after taking in the transaction value. Buyer X will pay the stamp duty and register charges in Sub-registrar office and get the documents registered. The act of registering the documents will create a legal proof.
Which documents require Stamp Duty?
There are several documents and cases that require stamp duty and registration charges. Some of them are listed below.
Sales Deed: It is a document which comprises legal transaction done in money, Basically dealing with transfer of ownership of the property by the seller to the buyer/transferee interested. The sale deed has full-fledged details of the Buyer and the Seller, appropriate details regarding the property and complete mention of the payment details.
Gift Deed: Since it is a gift deed the transaction has no dwellings on monetary aspects, instead it transfers the ownership or the title of the property from the person who is giving (ie; Donor) to the person gifted (ie; Recipient) If the arrangements are fulfilled legally the gift deed is successful and the property status can be transferred.
Exchange Deed: Exchange deed is nothing but the transfer of ownership or title with another ownership, title or rights. The exchange deed is a complex process as it requires a lot of legal arrangements and list of legal documents.
Partition Deed: The inheritance law persists in partition deed. Partition deed describes how legally the real estate can split among the new owners of the property. As it has new owners after the partition deed came into effect it needs to be registered to come into legal succession.
Lease Deed: It is basically a document containing all the information about the lessor, lessee and the payments to be made during the duration of lease.
Mortgage Deed: Mortgage Deed is nothing but shifting or transferring the right of property for a loan. It is generally a debt that is paid or given into account for a property desired.
Transfer Deed: Transfer deed generally deals with transferring of ownership or the title from one individual to another.
Power of Attorney: It is a legal document through which authority is passed from one person to another for taking a financial or personal decision. The person who issues the power of attorney is called the “Principal” or “Grantor” and whom it is given or passed is called “Agent” or “Grantee”. There are two types power of attorney called, The General Power of Attorney and The Special Power of Attorney.
What is Circle Rate and Market Rate ?
Circle rate is also called the GUIDELINE VALUE, GUIDANCE VALUE, READY RECKONER RATE. Circle rate is the minimum rate at which stamp duty and registration charges are collected by the State Government. It is periodically updated between (6months-1year). It usually lags behind the Market Value.
Market Rate is the rate that is operated by the forces of the market ( ie.demand and supply).It has a dynamic value.
Calculation Of Stamp Duty and Registration Charges in India.
As we know ,The rate of Stamp Duty and Registration Charges depend from state to state and even different zones of the state. For instance, The Circle Rate in Nehru place in Delhi is 7.74lakh per sq meter and whereas, The Panchsheel park of Delhi has a rate of 2.46lakh per sq meter. Lets see how can we determine the rate for the stamp duty and registration charges.
Market Value= Rs.2Crores
Circle Rate= Rs.1.5Crores
If SD and Registration charges is (5%)?
--Higher of the two value will be taken into consideration we see here the MV > CR, Then
5% of 2Crores is Rs 10,00,000
Circle Rate= Rs.1 Crore
Market Rate= Rs.70 Lakhs
If SD and Registration charges is (5%)
--higher of the two amounts will be taken into consideration we see here CR>MV,Then
5% of 1 Crore is 5,00,000
How to pay Stamp duty and registration charges?
Non-Judicial Stamp Paper: Stamp paper can be easily brought from the Stamp vendor and the duty can be paid thereafter.
E-Stamp: it can be downloaded online and there can be payment through NEFT/RTGS.
Franking Method: In franking method one needs to submit an application with the authoried or the specific bank which facilitates the franking method. Benefit of this method is quick if the charges are paid through cash or demand draft.
Hence, above article makes depth analysis of stamp duty and registration charges in india and we hope you got the perfect glimpse of this govt tax in the form of stamp duty prevailing in our economy.