Today, numerous Indians try to possess property when they begin working. In any case, focusing in on the correct property isn’t simple. Regardless of whether you figure out how to do that, you need to apply for a Home Loan and get the property enlisted in your name.
Transfer of ownership is a pretty complicated process. It is important for property buyers to know that for ownership transfer, a buyer needs to pay some charges in the form of stamp duty and also for registration.
This will be collected by the respective state governments and is precisely why these charges vary from state to state. Two things that you need to remember – 1) there are a few states that provide discounts to women buyers of the property and 2) most states tend to have different stamp duty charges for their rural and urban areas.
Stamp Duty
Stamp duty is similar to other taxes levied by the Government, only here it is collected for transactions that involve legal documents such as the sale deed, conveyance deed, and sale agreement. In technical terms, stamp duty is a tax paid for any document through which any right or liability is, or is intended to be, created, extinguished, transferred, extended or recorded.
Only upon payment of stamp duty, the document (for which stamp duty is paid) becomes legal. Also, only after this can the document be used as evidence in a court of law.
How Is Stamp Duty Calculated?
In India, the calculation of stamp duty differs from state to state. It also depends on the type of document for which stamp duty has to be made.
For example: In Maharashtra, under Schedule I of the Bombay Stamp Act, documents are divided into 3 categories, as below.
Category (i) Here, documents will have a fixed stamp duty and these include divorce, affidavit, adoption deed, memorandum of marriage, power of attorney and indemnity bond.
Category (ii) For documents under this category, the stamp duty will be levied according to the value mentioned in the documents. These include agreement relating to deposit of title deeds, hypothecation, pawn, lease, clearance list, mortgage deed, and article of association.
Category (iii) Under this category, stamp duty will be based on the value stated in the document or the market value, whichever is higher. Documents here include conveyance deed, gift, an agreement for sale, partnership deed, transfer, development agreement and trust.
When Do You Pay Stamp Duty?
You will have to pay stamp duty before or at the time of executing the deed for which the stamp duty has to be paid. So, typically you either pay the stamp duty before the day on which it is executed or on the day when you execute the deed.
How To Pay Stamp Duty
There are 3 ways in which you can pay stamp duty. They are:
- Through physical stamp paper
- Franking
- E-stamping
You must remember that all states will not have all 3 methods. In case all 3 ways are available, you could choose the method that suits you.
1. Purchase Of Physical Stamp Papers:
This is the most traditional way of paying stamp duty. Here, you purchase non-judicial stamp paper from an authorised vendor. Non- judicial stamp paper are papers that have impressed stamps. Once you purchase the stamp paper, the transaction details can be written/typed on them. Finding a vendor selling this type of stamp papers is no easy job. Also, many a time there is a shortage of such paper. If the stamp duty that has to be paid is a high amount, then you might require many stamp papers. So, this method is not preferred by many.
2. E-Stamping
To avoid counterfeit stamp papers and to make stamping easy, the Government introduced e-stamping. In some states, e-stamping is compulsory. E-stamping is essentially stamping done online. Stock Holding Corporation of India Limited (SHCIL), has been appointed as the official vendor for e-stamping and is also the Central Record Keeping Agency for all the e-stamps that are used in the country.
In order to do e-stamping, you have to visit the SHCIL website. Choose your state to see if e-stamping is allowed. You will get information on the transactions that you must e-stamp and the list of collection centres that will issue certificates to those who e-stamp. Fill up the application form and give it to the collection centre along with the money for the stamp duty.
There are several ways you can pay such as through Debit Cards, Credit Cards, cheque, demand drafts and online banking. Once you pay the stamp duty, you will get the e-stamp certificate. This certificate will come with a unique certificate number (UIN) that will have the issue date.
The benefit of e-stamping is that it is convenient. Another benefit is that the authenticity of your e-stamp can be verified online using the UID number. However, the issue with e-stamping is that a duplicate of your e-Stamp will not be issued.
3. Franking:
This is where an approved franking specialist will put a stamp on your report showing that the stamp obligation has been paid. Before you execute the exchange for which stamp obligation must be paid (normally this will be before marking on the record), you should approach an approved bank who will go about as a franking operator, or a franking operator to store the stamp obligation. When you pay the stamp obligation, a franking machine will be utilized to straight to the point the record with a unique glue stamp.
Every state will have a minimum amount prescribed for franking. For instance, minimum franking charges in Bengaluru are pegged at 0.1% of the agreement value. So, if you are buying a house for Rs. 50 lakhs, you need to pay 0.1% or Rs. 5,000 as charges for franking.
This fee will, however, be adjusted against the stamp duty at the time you execute the sale deed. Say, if the stamp duty for the sale deed is 5.5%, then, you need to pay only 5.4% because you already paid a franking charge of 0.1%.
Registration Of Documents
Once you pay the stamp duty, the document has to be registered under the Indian Registration Act with a sub-registrar. This registrar should be of the jurisdiction where the property is situated if the transaction involves property purchase.
The basic purpose of registration is to record the execution of the document. Only when you register the document, it becomes legal and the ownership, if any, is transferred to the right owner.
Registration Fee
The registration fee is a fee that is over and above the stamp duty. This fee varies from state to state. For example, the registration fee in Karnataka is pegged at 1% of the value of the transaction.
Registration Procedure
There are many documents that you need to register a transaction. Here are the documents required at the time of registration for a property purchase in Karnataka:
Please Note: The documents might vary from state to state.
- Proof of identity such as passport, driving license and PAN card, for both the buyer and the seller.
- The original sale deed along with two photocopies of the original. The document should have print or writing on only one side. This must be given to the officer at the registrar’s office.
- Proof of payment of registration fee.
- Proof of stamp duty paid.
- Proof of payment made to the seller.
- Tax certificate, if it is a second-hand property.
- Khata certificate.
There are a few situations where you have to suggest the enrollment office of property exchanges. This is particular to the territory of Maharashtra. This will be pertinent to the individuals who take a Home Loan for the buy of a property. For this situation, you will contract the “title deeds” to a moneylender. It is currently mandatory that the state enlistment office is educated about all home loan subtle elements inside 30 days of a home loan being executed. This is under the Registration (Maharashtra Amendment) Act, 2010. This demonstration came into drive on first April 2013. This demonstration is a revision to the Indian Registration Act, 1908. The following process has to be followed:
- If an agreement is signed between the Mortgagor and the Mortgagee, it has to be compulsorily registered. This is applicable in case of mortgages that are done by way of deposit of title deed. This is for those that have been done on 1st April 2013 and thereafter. The usual time limit for registration is four months from the date of execution.
- In case the agreement is not signed, then the mortgagor has to file a notice of intimation. This intimation has to be filed within 30 days from the mortgage.
- If the agreement has been signed and registered, then you needn’t file the intimation.
- Any person who does not file such notice within the prescribed time limit will be liable to be punished.
- In simple words, the notice of intimation will be filed only when an agreement between the lender and the loan applicant has not been registered. This intimation notice has to be sent within 30 days of purchasing the property.
The fundamental point of this correction is to protect the interests of moneylenders and the general public on the loose. This will likewise help keep the act of individuals obtaining advances from numerous loan specialists for a similar property. This can likewise check in the event that somebody is endeavoring to offer a property that is as of now under home loan.
How To File The Notice
You can file the notice of intimation using an online application known as the “e-registration module”. This was launched by the Department of Registration & Stamps. You have to access their respective website, fill in the application form online and submit it. This is totally online. So, you don’t have to go to the office of the sub-registrar. This has been prescribed by the e-Registration and e-Filing Rules 2013.
