What is stamp
duty & why it should be paid ?
Stamp duty is a tax,
similar to income tax and sales tax, collected
by the government. The stamp duty is paid
by the buyer of the property. It is payable
on the market value of the property or agreement
value, whichever is higher.
The purchase
agreement of a property does not become legal
until it is executed by the government, for
which you need to pay the stamp duty. Also,
only instruments that are properly stamped can
be admitted as evidence in court.
Value
of stamp duty
Is fixed by the government
and varies from locality. It is the minimal
amount property must be valued at and is calculated
per sq. feet.
The government
assesses the market value of property every
year, and the revised rate, fixed by the state
government and published in the Ready Reckoner,
has been applicable since Jan 1, 2007.
Stamp
Duty assessments are also made on the basis
of the Ready Reckoner with builder and property
brokers using it to peg prices.
When
is stamp duty payable ?
It is payable before or
on the day of execution of the document, or
on the next working day.
If there
is a delay in payment, it attracts penalty at
the rate of two per cent a month on the deficit
amount of the stamp duty. The maximum penalty
is 200 per cent of the deficit amount of stamp
duty.
ABCs
of owning a house :
|
• |
For
registration, the document should be
typed/printed on one side only and submitted
along with a photocopy of the original
to the Registering Officer. The copy
should be photocopied only on one side,
with a butter paper in-between copies
– to prevent the typed matter
from getting smudged. The copies need
to be bound in a particular manner as
well. |
| • |
Stamp
duty, according to government valuation
or actual consideration, whichever is
higher, is required to be paid on the
same day or a day before registration.
The document is prepared on a stamp paper
or franked at a bank or a sub-registrar’s
office. |
| • |
A
no-objection certificate (NOC) from the
society is applicable if the property
is located in a co-operative society.
Or if the society is not formed, the purchaser
needs to obtain the NOC from the builder.
|
| • |
The
document should be registered within four
months of signing the document. Else,
the registrar can complete the formality
subject to payment of a fine. The fine
cannot exceed 10 times the registration
fee. |
| • |
For
registration purposes both the buyer and
seller need to be physically present before
the sub-registrar or the competent authority.
The clerk stamps and numbers the document
and forwards it to the registrar for his/her
signature. |
| • |
In
most states, a photograph of the buyer
and seller is taken along with their thumb
impression and/or signature. |
| • |
The
document is then scanned and the buyer
gets the original copy the same day. This
may vary from state to state, taking three
to seven days. |
| • |
The
receipt should be preserved. At any time
in the future if a reference need to be
made, the original receipt is required
to be produced to the registrar. |
Some
consultants claim to get the market value reduced
to save a substantial amount of stamp duty.
Is this correct ?
Many people are under
the impression that some consultants can help
them in reducing the stamp duty. We would like
to warm them that this can be done only by furnishing
misleading information like lesser area of premises
or flat, longer age of building and a building
with a lift as not having a lift.
This
would prove to be very detrimental and harmful
when, in future, they receive a notice from
the department for under valuation due to concealment
of facts. Even a registered document can be
reopened anytime within ten years from the date
of registration and adjudicated documents within
six years from the date of adjudication. Please
note that writing misleading information in
the agreement is an offence under the Stamp
Act, which is punishable with fine and imprisonment.
Stamp Duty Calculations
|
Market Value
of Flat |
1/5/2006 Onwards |
| Upto
1 Lakh |
Rs.
100 |
| 1 to
2.5 Lakhs |
Rs.
100 |
| Upto
5 Lakhs |
Rs.
7600/- |
| Above
5 Lakhs |
5% |
|
