We all know that owning a Property (Residential or commercial) is not only one of the biggest financial decisions that you will make in your life but also a very daunting task in itself.
The Process itself is so draining that it keeps us on our toes and is bound to be a vigil at every step, Let it be a site visit, trusting a developer, getting it right, and once the sales are completed other expenses like Stamp duty, registration, and whatnot. It is an experience of a lifetime, while buying a property, the identification, payments terms, loan, etc. are expected to be completed with a lot of leg work.
A very highly ignored step is that of the property buying experience is that of possession and registration of the property. Once the possession of the property is being handed over, it is the responsibility of the buyer to register the property in her / his name.
Physical Possession of the property I merely the 50% of the job done, however, the rest 50% is the paperwork that is as necessary and important as the physical Transfer. The legal evidence of the property owner is the job that is to be finished at the buyer’s end.
There are a few of the steps that are to be followed religiously in order to make the deal complete.
1. Property registration in the buyer’s name in the local municipal records, the documents should clearly state that the seller has transferred the property in the name of the buyer.
2. What is stamp duty?
Stamp duty is a kind of tax, very similar to income tax, which is collected by the government. Stamp duty is payable under Section 3 of the Indian Stamp Act , 1899. Stamp Duty must be paid fully and on time.
3. Delays in paying of Stamp Duty – in case of a delay in the payment of stamp duty, it attracts a penalty. A stamp tax-paid instrument/document is taken into account as a correct and legal instrument/document and has evidentiary value and is admitted as evidence in courts. Document not properly stamped is not admitted as evidence by the court.
4. Why is Stamp duty Collected – at the time of registration the stamp duty is collected by the local state government. The amount of the stamp duty is varied from state to state, kind of property (Old or New) the circle rate. Overall the stamp duty adds up to the overall value of the property for the buyer. The best advice would be to get the information about the stamp duty beforehand
5. Buyers Liability – in regard to the agreement of sale, it is the prime liability of the buyer to pay for the stamp duty as stated by the authority books. If discussed and agreed upon, the buyer and the seller can share the stamp duty equally or as per the decided terms as shared and accepted before the sale deed.
6. When is the stamp duty payable?
The Stamp duty is payable much before the execution of the document or at the max, it should be paid on the date of execution of the document or on the next working day of executing such a document. Execution of the document means putting a signature on the instrument by the person’s party to the document.
7. Penalty charges due to delay in Stamp duty Payment
As per the government laws, Any delay in duty payment will attract the amount of 2% per month to the maximum of 200% of the deficit amount of stamp duty. Stamp papers are to be purchased in the name of either of the parties, i.e, seller or buyer involved in the agreement, failing which will disable the stamp paper. Stamp papers are said to be valid for six months from the date of purchase, only if the duty is paid on time.
8. Who is liable to pay?
Ideally to be paid by the Buyer but In the absence of any agreement to the contrary, the purchaser/transference has to pay stamp duty or in case of an exchange of properties, both parties need to bear stamp tax equally.
9. How to Sign the Instrument?
According to the provisions of Section 12 of the Indian Stamp act 1899, any person executing (Signing) an instrument—affixed with an adhesive stamp—shall cancel the adhesive stamp by writing on or across the stamp his full name or only the initials. If such an adhesive stamp has not been cancelled in an aforesaid manner, such a stamp is deemed to be stamped.
10. What is the instrument?
Any document by which any right or liability is, or purports to be, created, transferred, limited, extended, extinguished, or recorded. The duty is payable on instruments and not on transactions. Stamp duty should be charged on the idea of the contents of the instrument only. If any information essential for working out stamp duty is missing in the instrument, the valuation officer can call for it. Information such as the area of the flat, number of floors, and year of construction must be mentioned in the agreement for a quicker response.
11. How should instruments stamped with an impressed stamp be written?
As per the supply of Section 13 of the Indian Stamp Act , 1899, any instrument on an impressed stamp, shall be written in such manner that the stamp may appear on the face of the instrument and can’t be used for or applied to the other instrument i.e., cancel the adhesive stamp so affixed by writing on or across the stamp his name or initials. If such an adhesive stamp has not been cancelled in an aforesaid manner, such a stamp is deemed to be unstamped.
12. Is stamp tax payable on all instruments/documents concerning the transfer of immovable property?
Any transfer of immovable property or documents shall attract the stamp duty, Except for transfer by Will (or by original nomination in a co-operative housing society) all transfer instruments/documents including agreements to sell, conveyance deed, gift deed, mortgage deed, exchange deed, partition deed, power of attorneys, leave and license agreement, agreement of tenancy and lease deeds have to be properly stamped before registration.
It is clarified that when a nominee transfers the flat subsequently in the name of the legal heirs, that transfer instrument should only be stamped as per the market value. If the flat has been purchased in a co-operative housing society on or after 10-12-1985, the buyer has to pay the stamp duty on the market value as per the Ready Reckoner. A flat purchased through an agreement purchasable on or before 9-12-1985 required stamp paper of Rs. 5 only. Sounds a bit old but However, a flat purchased on or before 9-12-1985 will require stamp duty on the market value at the time of conveyance of the property in favour of the society. The concept of payment of stamp duty on market value was introduced from 04-07-1980 will be charged on agreement value only.