| 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% |
|
