Stamp Duty Laws

What is stamp duty? Why should it be paid and by when?
It is a tax and must be paid in full and on time. A delay attracts penalty at 2% per month, subject to maximum penalty of 200% of the deficit amount of stamp duty. Documents lodged with the sub-registrar/superintendent of stamps prior to any amnesty scheme attract a lump sum reduced penalty. Documents not properly stamped are not admitted in court as evidence. It is payable before execution of the document or on the day of execution of document or on the next working day. Execution of a document means putting signatures on the instrument by persons party to the document.

Who pays?
In the absence of an agreement to the contrary, the purchaser/transferee has to pay or in case of property exchange, both parties have to bear it equally.

On what instruments does stamp duty have to be paid?
Instruments include every document by which any right or liability is or purports to be created, transferred, limited, extended, extinguished or recorded but does not include a bill of exchange, cheque, promissory note, bill of lading, letter of credit, policy of insurance, transfer of shares, debentures proxy and receipt (which is charged under Indian Stamp Act, 1899). Except transfer by will (or by original nomination in a co-operative society) all transfer documents including agreements to sell, conveyance deed, gift deed, mortgage deed, exchange deed, deed of partition, power of attorneys, leave and licence agreement, agreement of tenancy, lease deeds, power of attorney to sell for consideration etc. have to be properly stamped. When a nominee transfers the flat subsequently in the name of legal heir, such transfer also requires stamp duty.

real estate laws, india real estate property laws, real estate laws india, real estate property laws, real estate transfer laws, real estate settlement lawsIf you have purchased a flat in a co-operative society on or after December 10 1985, you have to pay stamp duty on market value as per the Ready Reckoner, issued every year in January.

This is a public document, available in any law bookshop. Market value is the value as worked out as per the Stamp Duty Ready Reckoner or the consideration stated in the instrument, whichever is higher. As per a new amendment in the Income Tax act, market value for the purpose of capital gain tax is the same as the market value for stamp duty payment.

How is a flat defined?
A flat means a separate and self-contained set of premises used or intended to be used for residence, or office, or showroom, or shop or godown or for carrying on any industry or business (and includes a garage), the premises forming part of a building and includes an apartment.

In whose name is the stamp paper required to be purchased?
Stamp papers are to be purchased in the name of one of the parties to the document, otherwise such agreement will be treated as if no stamp paper was used. However, it will not make the agreement invalid and can be enforced in Law if proper duty is paid subsequently. Stamp paper is valid for six months from the date of purchase.

What is a revenue stamp?
It is a tax of Re.1 in the form of revenue stamp, which should be affixed on receipt for any money or other property, the amount or value of which exceeds Rs. 5,000.

Is stamp duty payable on the instrument or transaction?
It is payable on instruments. If any information essential for working out stamp duty is missing, the valuation officer can call for it. Information such as the Carpet or Built-up area, number of floors in the building, year of construction, name of Division/Village and C.S./C.T.S. number of plot of land, must be recorded in the agreement for quicker response.

What is the rate of stamp duty?
Stamp duty on non-residential properties whether in a co- operative society or not is at a flat rate of 5% of the market value. Stamp duty on residential flats in a housing society and buildings covered under Article 25(d) of Schedule I of Bombay Stamp Act. 1958, attracts concessional rates depending upon its market value as follows: Upto Rs. 1,00,000 stamp duty is nil Between Rs. 1,00,001 to Rs.2,50,000, it is 0.5% of the value. Between Rs. 2,50,001 to Rs.5,00,000 Stamp duty is Rs. 1,250 + 3% of the value above Rs.2,50,000. Above Rs.5,00,000 stamp duty is Rs.8,750 + 5% of the value above Rs.5,00,000.

What precautions should one take to avoid practical difficulties later?
Generally one copy of the exchange agreement is made and registered and then there are various practical problems.

The following precautions should be taken to avoid complications:

 – Assuming there is one ‘Flat-A’ owned by ‘Person AA’ and he wants to exchange it with ‘Flat-B’ owned by ‘Person BB’. In the Exchange Agreement there should be a clause where it states that original agreement will be considered original agreement for ‘Flat-A’ and will remain with it’s new owner ‘Person BB’ and second copy will be considered original agreement for ‘Flat-B’ and will remain with its new owner ‘Person AA’.

 – Agreements should be made in duplicate. The original agreement will be charged with full stamp duty and second copy will be charged only with Rs.20.

  – Both agreements must be registered. The original agreement will be charged full registration fees and second copy will be charged a nominal amount.

  – Both the persons must keep their respective copies and will be free from each other in all respects.

Housing sector hit on the back of steep hike in guideline values

At a time when land values started stabilising in and around Chennai, the Tamil Nadu government has increased the guideline values for land registration purposes by hiking the values from 60 per cent to 300 per cent effective April 1. This has sent shock waves among the industry and the land owners and property developers are in a piquant situation now.

The government’s reduction in stamp duty by 1 per cent has not gone well with the industry when the guideline values were raised to abnormal levels. The real estate sector is in for turbulent times due to sudden and abnormal hike in guideline values and the worst hit sector will be affordable housing segment.

According to official sources, though the revenue for the two month period (April and May) was up by Rs 100 crore, the volume of transaction has come down drastically.  Industry sources say that city area transactions fell through due to reluctance on the part of buyers to absorb the hike in stamp duty.

In vibrant commercial areas like Whites road, the guideline value soared to Rs 16,000 above the market value, say property consultants.  In other city areas like Abhiramapuram, the value for residential area is more than the commercial value (see table).  The state government in their anxiety to curb the unaccounted money in real estate transaction has sent a wrong signal to the market which will adversely impact the housing development.

Land transactions are not happening nowadays not because of the steep hike in guideline values alone but due to the cascading impact of RBI restrictions on bank funding to realty sector, uncertainty in FDI investment, global meltdown, higher expectations of PE funds and soaring land value.  What has aggravated the whole scenario further is the sudden hike in guideline values.

The worst hit in the current scenario is the affordable housing segment and the common man for whom the dream of owning a shelter will only get longer. Though official sources claim that the hike in guideline values range from 60 per cent in suburbs and peripheral areas, lack of infrastructure and diminishing margins for developers will not encourage them and only prolong the overall development of affordable housing in the coming months.

Yet another segment that bore the brunt of the hike in guideline values is the land owners in exigencies. The distress sale is not happening due mainly to the hike in guideline values, say industry sources.

V Nagarajan, Property Consultant

Tamilnadu New Guideline Value : How much Increased?

The TN (Tamil Nadu) state government has decided to implement the revised guideline value of plot of land and properties with effect from April 1, 2012. Simultaneously, to give relief to the general public, it has proposed to bring down the stamp duty from the existing 6% to 5%
The Tamilnadu government also announced a 1% cut in stamp duty, from 6% to 5%, with effect from April 1, 2012. The 2% surcharge (collected for development of local bodies like corporations, municipalities &  village panchayats) and 1% registration fee, however, will continue without any change.

In effect, overall registration charges will come down from 9% to 8%. Total registration fees (8%) for a property worth Rs. 20 lakh will be Rs.1,60,000.

With the revision and increased, the valuation of urban land will be up by 150% to 170% and rural & agricultural land by 250% to 270%.

For New  Guideline Value (2012, April) Click following Link

One of the Chennai’s leading property developer said, ”The revision is expected to have a negative fallout in the initial 3 to 5 months, when property registrations may slow down. But registrations are bound to pick up in the medium to long term.”

According to an officer in registration department,  ”The revision will not only help augment our revenue collection, but also curb black money in property deals”

The hike in guideline values is expected to increase the TN registration department’s revenue by Rs. 1,500 crore, taking it closer to the Rs. 8,700 crore mark in the next financial year (2012- 2013). The Tamil Nadu state had mobilised Rs. 5,740 crore through registration of properties till the end of February, 2012.  By now, it should have crossed the projected mark of Rs 6,000 crore. Registrations worth Rs. 500 crore are expected in the next 3 days.

The draft of the new guideline values was published last October, (2011) and after taking feedback from general public, the final draft was released in November.


Property transactions dip in TN post guideline value hike

Despite the state earning a much higher income from property registrations in the first quarter of the current financial year, compared to the corresponding period last year, a closer look shows the number of transactions dipped during the period. There was an overall fall of 19.88% in the number of documents registered in the state during the first quarter.

Coimbatore region recorded the steepest fall of 29.47%, while Chennai region comprising Chennai north, central, south, Chengalpet and Kancheepuram registered a 9.2% dip. Industry sources said the huge increase in guideline values, which came into effect on April 1, is wreaking havoc in the realty sector. The last time the sub-registrar offices in the state saw a huge rush was in the second half of March, when many people rushed to get their properties registered before the revised guideline values came into effect. The registration department capitalized on the rush and earned 500 crore in a few days.

Among the tier-two cities, Madurai recorded a 23.6% fall in property registrations. “It is due to the huge increase in guideline values of properties, which is proving to be an impediment. Though the market value of certain areas is relatively low, the new guideline values are making it near impossible to buy properties. The industry is witnessing a disturbing trend,” said T Chitty Babu, secretary, Confederation of Real Estate Developers‘ Association of India (CREDAI).

The representations given by CREDAI to the government to rationalize guideline values in many areas did not yield results, Babu said. In the first quarter ending June this year, about 6.3 lakh registrations of properties were done across the state, while it was 7.9 lakh in the corresponding period last year.

After the state released the draft guideline values in October last, the sub-registrar offices across the state witnessed a steady growth in registration revenue as people wanted to avoid paying more stamp duty and registration charges later on.

“But that stopped abruptly in April. Chennai, Madurai and Coimbatore regions managed to register only 2.9 lakh deals in the first quarter this year,” a senior government official said. The sub-registrar offices in Chennai registered only 1.08 lakh documents, as against 1.19 lakh documents in the corresponding period last year.

“Most of the property deals that took place recently were driven by the NRI market,” said CREDAI national governing council member N Nandakumar.


Why you should register your property

Procrastination can often exact a heavy price. Nearly 15 residents of a housing society at Vikroli, Mumbai, discovered this when they delayed registering their property for more than two decades. Says 59-year-old Francina D’Souza , society secretary: “When the building was constructed in 1985, 40 of the 55 buyers got their flats registered, but the remaining 15 were duped by a lawyer and didn’t realise that this was necessary. This came to light only recently when some of the owners wanted to sell their apartments and found it impossible to do so.”

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The only way out for the 15 flat owners is to register their flats now. However , the biggest hurdle they will face is that the registration charge and stamp duty will be levied on the current value of the houses. Adding to this burden will be a hefty fine that the owners will have to pay for the delay. The entire exercise will cost the owners lakhs of rupees .

Registering your property should be the top priority when you buy a house as it proves your legitimacy to carry out any transaction. “A person is considered the lawful owner of a property only after he gets it registered in his name,” says Om Ahuja, CEO, residential services , Jones Lang LaSalle India. If you fail to do so, the previous owner or the developer will be considered the legal and rightful owner.

Pitfalls of not registering

The Supreme Court had ruled last year that all property sales would be considered invalid unless the sale deed was duly stamped and registered. “In the absence of the deed of conveyance (duly stamped and registered as required by law), no right, title or interest in an immoveable property can be transferred,” the apex court had held. Under Section 49 of the Indian Registration Act, 1908, the documents (sale/gift agreement) will not have any bearing on the property and will not confer any transaction rights on the property. In case of a dispute , you will not have any rights on the property if it is not registered in your name.

Advocate Vinod Sampat, president, Cooperative Societies Residential Users Association, explains that you will need to register the property within four months of the date of execution of the sale deed. If the value of the property is 10 lakh, you will have to pay a stamp duty of 50,000-1 .25 lakh (5-12 .5 % of the property value) and a registration fee of 1% or 10,000.

In case of a delay, you can request the district registrar to grant you an extension of another four months. However , you will have to pay a penalty of up to 10 times the registration fee. “Usually , the penalty levied is 100-300 % of the registration amount, but it can go up to the maximum amount too,” adds Sampat . So, for a house of 10 lakh, the penalty could be an additional 10,000-30 ,000, while the maximum limit would be 1 lakh. If the property is gifted, the stamp duty payable is lower at 2%, though the registration charges will be the same.

The stamp duty and registration charges will be applicable as per the current year, even though you may have bought the property a few years ago. The one exception to this rule will be if you have inherited the property. Says Sampat: “It is not necessary to pay stamp duty on a property bequeathed through a will.”

When to register

You will have to pay the stamp duty and registration charges for the sale deed and get these documented at the registrar’s office. If you are buying a house that was previously owned, the transaction will also entail a duly stamped and registered transfer deed.

In case the property is mortgaged, the lender will require a no-objection certificate from the housing society. It will then initiate the loan disbursement, depending on the repayment eligibility of the buyer. The registration process can be carried out only after the bank confirms the disbursement to the seller . The housing society too will need to be informed, otherwise the new owner will neither be able to create a third-party lien nor be able to sell the property.

Some state governments are trying to ease the registration process. For instance , Delhi is the first city where people can register their property online by paying the charges through electronic transfer. Other states are likely to introduce this system.


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Source:The Times of India.

Stamp duty hike likely to net govt Rs 7,200 crore

Your dream house will now be more dearer. With the Andhra Pradesh government imposing a sharp hike in stamp duty on various property deeds, customers will now have to shell out an additional 15-20 per cent to buy a house in the city. This revision will help the government net a whopping Rs 7,200 crore as annual revenue from registration fee.

With effect from September 20, the stamp duty on development-cum-general power of attorney (DGPA), agreement of sale-cum-general power of attorney (AGPA) and agreement of sale (AOS) deeds will be 5 per cent as against the existing 1 per cent. The stamp duty on gift, release and settlement deeds too will go up from 1 per cent to 3 per cent. In the case of DGPA, the 5 per cent stamp duty would be the highest in the country.

The order was issued by the stamps and registration department of AP on Wednesday wherein it stated that “the government after careful examination of the matter had decided to rescind the earlier GOs (that had reduced the duty on these deeds)”.

Reacting strongly to this move, city realtors said that this revised fee would prove to be fatal, especially for medium and small-scale builders. “As it is the markets are down and sales are far and few in these section of people. Now, the inflated duties will hit them further as the demand will drop drastically,” said R Chalapathi Rao, vice-president, Andhra Pradesh Real Estate Developers‘ Association adding, “It will be a struggle for the developers to raise funds for paying stamp duty.”

Further, condemning the rise in duty on gift deeds realtors said that such deeds comprised less than one per cent of the total annual registrations. “These deeds do not even generate high revenue. Then why unnecessarily increase the duty on them?” questioned one realtor expressing concern over this revised fee structure. “This will only make way for more unlawful dealings. People will now shy away from registering their properties to evade these heavy duties,” he said.

Meanwhile, when contacted, officials of the department said that the GO had been misread by realtors. While they admitted that stamp duty on most of these deeds had been increased, they claimed that the registration fee on DGPA was not altered. “There has been some miscommunication,” said M Sahoo, principal secretary, revenue (stamps & registrations) adding, “The revision of fee is only pertaining to AGPA, development deed and others deeds. We will soon issue a clarification to set the record right.”

Justifying the GO, Sahoo said that the revision was made to eliminate fraudulent dealings wherein properties were sold by `third parties’ with no title to the land. “Such dubious deals had led to an increased number of litigations and we need to check that,” he said.

Source:Times of India

Purchase of Land – Legal Checklists

Owning a house is an important thing in one’s life. However, one needs to be careful while buying a property to avoid falling into legal hassles. Before buying a land, a number of checks need to be done to confirm that the land has a clear and marketable title. The legal status of the land is one of the first issues that should be addressed before confirming a property.

Title deeds

The first step is to see the title deed of the land, which you are going to buy.

* Confirm whether the land is in the name of the seller and that the full right to sell the land lies with only him and no other person.
* It is better to get the original deed examined by a lawyer. This is to check details like whether the seller has permitted any entry/access to others through this land and whether any other fact has been suppressed/left undisclosed by the owner of the land.
* Along with the title deed, you can also demand to see the previous deeds of the land available with the seller.
* In some cases, more than one person may own the land. So before registering, check if there is more than one owner, and if there is, get release certificate from the other people involved.

Conveyance Deed or Sale Deed

A sale agreement is a document by which the title of property is conveyed by the seller to the purchaser. Here, conveyance is the act of transferring ownership of the property from a seller to the buyer. This document will help you ascertain whether the property, which you are buying, is on land belonging to the society/ builder/development authority in which the property is located.

Tax receipt and bills

Property taxes, which are due to the government or municipality, are a first charge on the property and, therefore, enquiries must next be made in government and municipal offices to ascertain whether all taxes have been paid up to date.

* Inspect whether the latest tax paid receipts have been paid.
* Enquire with various departments of the municipality to ascertain whether any notices or requisitions relating to the property are outstanding.
* If you are buying a house along with the property, then the house tax receipt should also be checked.
* Also ensure that the electricity and water bills are up-to-date and if there any is balance payment to be made, ensure that it is made by the seller.

Encumbrance Certificate

Before buying any land or house, it is important to confirm that the land does not have any legal dues.

* Obtain a certificate called encumbrance from the sub registrar office where the deed has been registered, stating that the said land does not have any legal dues and complaints.
* You can check the encumbrance certificate for the past thirteen years or could demand verify the 30 years encumbrance certificate.

Pledged land

Some people may have taken loan from the bank by pledging their land.

* Ensure that the seller has paid back all the amounts due.
* Ask for a release certificate from the bank, which is necessary to release all the debts over the land legally.

Measuring the land

It is advisable to measure the land before registering the land in your name. Take the help of a recognized surveyor to ensure that the measurements of the plot and its borders are accurate. You could also take the survey sketch of the land from the survey department and compare for accuracy.

Purchasing land from NRI landowners

A person staying abroad can also sell his land in India by giving a Power of Attorney to a third person authorizing him the right to sell the land on his behalf. In such cases, the power of attorney should be witnessed and duly signed by an officer in the Indian embassy in his province.

Power Of Attorney

Power of Attorney is the power given to an agent by the principal to execute several acts and deeds for and on behalf of the principal. Stamp duty payable depends on the nature of power given.

When ‘power’ is given in respect of a number of acts in a number of transactions it is called General Power of Attorney. It is always advisable to hold a registered GPA while registering an immovable property in order to give better title to the property.

When ‘power’ is given in respect of a particular act pertaining to one transaction it is called Special Power of Attorney.


Once all the matters, financial/otherwise are settled between the parties, it is better to give an advance and write an agreement. This ensures that the owner does not change his word regarding the cost as well as make a sale to someone else who offers more money.

* The agreement should be written in Rs.50 stamp paper.
* The agreement should state the actual cost, the advance amount, the time span within which the actual sale should take place and how to proceed in case of any default from either parties, to cover the loss.
* The agreement can be prepared by a lawyer and should be signed by both the parties and two witnesses.
* After signing the agreement if one of the parties
makes a default, the other party can take legal action against him.

Stamp Duty

It is tax, similar to sales tax and income tax collected by the Government, and must be paid in full and on time.
* A stamp duty paid is considered a legal document
and such gets evidentiary value and is admitted as evidence
in courts.
* Stamp duty is a State subject and hence would vary from state to state.
* When an agreement is to be stamped, it needs to be unsigned and undated one may execute the agreement only after the Stamp Office affixes stamps on the agreement.


Registration is the process of recording a copy of a document, transferring the title in immovable property to the office of the Registrar. It acts as proof that a transaction has taken place.

* A draft should be prepared before actually writing the document in stamp paper. Registration is done after the parties execute the document.
* The agreement should be registered with the Sub-Registrar of Assurance under the provisions of the Indian Registration Act, 1908 within four months from the date of execution of the document.
* Make sure all the details mentioned are accurate.
* Original title deed, Previous deeds, Property/House Tax receipts, etc plus two witnesses are needed for registering the property.
* The expenses involved during registration include Stamp Duty, registration fees, Document writers/ lawyers fees etc.
* Make sure that the deed is registered within the time limit mentioned in the agreement.
* Stamp duty should be paid prior to the Registration.

Changing the title in Village office

The whole legal procedure of buying the property will be complete only if the new owners name is added in the village office records. An application can be made along with the copy of the registered deed to the Village office to get this done. Purchase of property is a lifetime investment. A lot of care is needed from the beginning- right from site seeing till the registration of the land. Ensure that the documents of title are scrutinised for marketability with due care by an experienced advocate.