by datta Nighut 
1. Introduction to Registration Fees and Stamp Duty
Registration fees and stamp duty are inevitable costs that need to be met by every individual purchasing a flat. A deed of sale of immoveable property for the value of over a prescribed amount must compulsorily be presented either for adjudication or for registration. On failure to present the documents, such a document is made to lose legal efficacy and is not enforceable in any court. The main object of registration at the registration office is to give authenticity to the registered document regarding its execution, the identity of parties, justness to title and right, due execution, and consideration where a document is impounded for want of correct stamp duty, or where the defect is pointed out.
The system of registration of documents was first introduced in the Indian subcontinent by the British. They used ‘paper’ including the rule of law, administration of justice, sanctity of contract, and engagement for delivery and peaceful enjoyment of property. The registration fee was also intended to be a source of revenue.
The Indian Registration Act, 1908, is modeled upon English law, but there were very stringent and rigid formalities and compliance with the Indian Registration Act, 1871, which was unsatisfactory. The Indian Registration Act, 1908, has added many innovative features relating to registration, removal of defilement, prevention of fraud and forgery, and the validity of and checking the prima facie proof of execution and title.
The Indian Registration Act, 1908, authorizes the State Government to fix registration fees that shall be levied on the registration of documents. The object and purpose of the registration fee or the stamp duty under the Indian Registration Act, 1908, are both identification facilities as well as taxing property since registration is prima facie proof of title.
The consent, approval, or payment of fees is recorded in the index maintained in the registration office. The stamps impounded for non-acceptance due to the lack of payment of regular fees or fraud do not prevent the latter for want of correct and regular payment of proper registration fees or vice versa.
2. Factors Affecting Registration Fees and Stamp Duty for Flat Purchase
Several factors determine the applicable registration fees and stamp duty charges for flat purchases. The location of the property is a significant determinant of the stamp duty and registration cost. These charges will widely vary across different states as they have different rates.
The rates typically range between 4% to 10% of the value of the property. Besides, the value of the property or the transaction price also affects the overall stamp duty and registration charges you need to incur. Stamp duty and registration charges are higher in the case of luxurious accommodations because their market rates are higher. Also, for the payment of the property, it is important that the value is calculated accurately.
The transaction value in the case of resale property or registration with the honor of agreement isn’t available before the flat is purchased. Therefore, for the computation of applicable stamp duty and registration charges, the valuators will calculate the market value of the property. The formula for calculating the market value of the property is set by the approving authority.
The rights and obligations for flat purchasers differ based on the kind of property bought, whether it is under construction, newly built, or resale flats. Hence, the additional stamp duty and registration charges are applied to both varieties of flats purchased by the flat purchasers. The policies and reforms have also recently had the impact of decreasing the total payouts for stamp duty and registration.
The discounts are also triggered by various government schemes. It is important for buyers of flats to understand how they could influence the general payments as well as all of these elements. Most have a talk with their finance expert before making any kind of suggestions regarding the total outflow rates of registration and stamp duty costs.
3. Calculating Registration Fees and Stamp Duty
Calculation of the property registration fees and stamp duty should ideally be known to a home buyer before the execution of a property sale. The stamp duty and the registration fees vary from one state to another.
The formula for the registration fees is the formula to calculate the stamp duty, which is X% of the total consideration stated in the sale deed or the value fixed by the collector for the unit of parking (if any) plus the value fixed by the collector for the car park. Navi Mumbai residents can use the same calculator as applicable in the Mumbai region, and the rate is almost the same. The developers can get the car parking done under the Maharashtra Flat Ownership Act, and the applicable rate would be 4% on the car park cost.
Calculation of the property registration fee: Calculate the stamp duty and registration fee for purchasing a flat of 1.5 crore in Thane (E). The amount of the property: Rs. 1,50,00,000. If you or your consultant are not aware of this calculation, then there are probabilities of making a mistake in mentioning the amount to be paid under the head of stamp duty and registration fee.
They could mention Rs. 100 as stamp duty and Rs. 500 as registration fees for a consideration of Rs. 10 lakhs. This mistake will lead to some problems, so ask them for the entire calculation.
They will help you get an idea of how to calculate the stamp duty and registration fees. The figures mentioned above should act as an eye-opener and give the flat purchaser an idea of the financial expenses to be shelled out when purchasing the flat. Both the flat owners and the consultant may not show the entire calculation. They could give you the total amount to be shelled out.
There are many legal firms that have come up with the online facility to calculate the stamp duty. The stamp duty online facility will help flat purchasers get up-to-date stamp duty ready reckoner for all the five regions: A. Mumbai City. B. Mumbai suburbs. C. Thane, Palghar. D. Pune. E. Pune ready reckoner or the market value of the area is available online. If the salesman is trying to sell you a property on a ‘Gaothan Property’ or not NA land in the Panvel region, then the calculation mentioned above will give you a fair idea of how to calculate the stamp duty on the rent agreement. Property buyers should be wise and knowledgeable before purchasing property. Ensure the financial figures are preplanned and you understand how the numbers have been confirmed. The stamp duty of 7% of the market value calculated would be charged.
For buying a flat worth Rs. 15,000,000, the sample calculation for calculating the stamp duty and registration fee for a property worth Rs. 6,000,000 is given along with the documents needed to calculate the rates. Non-senior citizen purchase rate: Rs. 6,000,000. First sale/mortgage white agreement.
The municipal market valuation of the municipal ward of Mumbai should be used. If the municipal market value is not given, the jantri or the ready reckoner rate of the property should be used. If the ready reckoner rate is also not given, then the rate should be fixed by the stamp office.
4. Exemptions and Concessions on Stamp Duty
Under the provisions of the Registration Act of 1908, the registration of a document is done at the time of transfer of ownership or title of a property and is mandatorily done with the area’s Sub-Registrar of Assurances. Stamp duty and registration fees thus have to be necessarily paid for these registrations. However, in certain situations, there may be some relief available in the form of waivers or exemptions, where a lower rate of stamp duty may have to be paid (or none at all).
The government has different categories of applicants who can get such benefits of a reduction in stamp duty and registration fees at the time of registering their property under construction, although definitions and terms may vary from state to state. Up to 50% off the ready reckoner market value if the sale-purchase is only of an apartment in a building and is for the first time. Sometimes, there may be some subjective conditions to claim benefits under this category.
In Andhra Pradesh, such a concession can be claimed even if the person has booked a flat with the builder’s property and has executed a registered sale deed and entered into possession of such a property, but the person claiming this concession will not own any other immovable property in his name as of the date of registration or in any of his near relations.
A marginal concession of a discount of either 1% or 0.25% on stamp duty or total registration charges can also be obtained by senior citizens or newlywed couples as well. Some states also provide stamp duty exemption to ex-servicemen who are physically handicapped of 50% on market value. Skilled professionals and other experts advise carrying out a thorough search of rates, offers, and other concessions available from state to state or even from city to city before claiming such concessions or waivers.
It is also necessary to verify in some cases the process of obtaining such concessions, including documents required, application framework, and deadline to apply for the concession/reimbursement, among others. It is crucial that a legal authority or consultant be engaged in such a process to claim the waiver.
5. Conclusion and Important Considerations
Conclusion
The honors recounting the application of registration fees and stamp duty and its calculation thereon needs no repeat. We are aware that these expenses are likely to be incurred over and above the flat value. Obtaining clarity over the likely expenses is relevant for financial planning as part of the real estate transaction and more particularly the cost of the flat. In addition, as the investors may make a profit at the time of actual sale, understanding exemptions and the applicability of the same will be another facet to be kept under consideration.
The law prevailing as of the date is recited, and it has already been indicated that enactments may witness changes. Hence, it is always better to update oneself regarding the applicable law. The enactment of the Income Tax Act has been taken as an example of law witnessing changes, making the position as per the date of writing superfluous.
Taking into consideration the application of service tax, VAT, etc., there is a possibility that a new situation may arise. Accordingly, it is suggested that the readers may always take steps to update their knowledge. With a view to obviate the complexities, a provision is made for seeking professional advice and the appointment of professional valuers for availing benefits under Section 50-C of the Income Tax Act. Before proceeding further on a likely purchase of actual property, professional legal and financial advice needs to be sought.
A suggestion is made to visit the registration office to understand the actual procedure. It would, however, be better to exercise abundant caution by preferring to pay an amount arrived at after actual calculations for final registration, instead of basing the same on the information collected during the visit.www.igrmaharashtra.gov.in
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