Is stamp duty payable on reregistration of property

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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.

Here, we tell you how the whole process of stamp duty and registration of property works.

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, 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.

Additional Reading: Effective Ways To Reduce The Interest Cost On Your Home Loan

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.

Purchase Of Physical Stamp Papers:
This is the most traditional way of paying stamp duty. Here, you purchase non-judicial stamp paper from any 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 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.

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.

Franking:
This is a process where an authorised franking agent will put a stamp on your document indicating that the stamp duty has been paid. Before you execute the transaction for which stamp duty has to be paid (typically this will be before signing on the document), you should approach an authorised bank who will act as a franking agent, or a franking agent to deposit the stamp duty. Once you pay the stamp duty, a franking machine will be used to frank the document with a special adhesive 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 transaction.

Additional Reading: All About The Down Payment For Your Home

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 some cases where you need to intimate the registration office of property transactions. This is specific to the state of Maharashtra. This will be applicable to those who take a Home Loan for purchase of property. In this case, you will be mortgaging the “title deeds” to a lender. It is now obligatory that the state registration office is informed about all mortgage details within 30 days of a mortgage being executed. This is under the Registration (Maharashtra Amendment) Act, 2010. This act came into force on 1st April, 2013. This act is an amendment to the Indian Registration Act, 1908. The following process has to be followed:

a) 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.
b) 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 mortgage.
c) If the agreement has been signed and registered, then you needn’t file the intimation.
d) 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 main aim of this amendment is to safeguard the interests of lenders and the society at large. This will also help prevent the practice of people procuring loans from multiple lenders for the same property. This can also check if someone is trying to sell a property that is already under mortgage.

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 the website www.igrmaharashtra.gov.in. 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 Maharashtra e-Registration and e-Filing Rules 2013.

Now that you know the whole process, it should be easy for you to register that house you are planning to buy. And this might be the right time to buy that house as loan rates have dropped. Always compare across lenders to get the best rates.

Advocate Siddhant Sharma LawRato