Stamp duty is mandatorily payable upon registration or transfer of property. Those investing their money need to be cautious about future obligations and such clauses
Stamp duty is a compulsory obligation payable on the document which encapsulates the transfer of immovable property, such as real estate. Homebuyers are required to pay this when registering the agreement for sale. “Different rates of stamp duty are payable in different states, depending on the legislation prevalent in that state,” points out Ameet Hariani, managing partner, Hariani & Co. “In Maharashtra for instance, the Maharashtra Stamp Act, 1958, regulates the different rates of stamp duty payable on the various instruments of transfer of immovable property.” In Maharashtra, the stamp duty is equivalent to 7% of the transaction value or the ready reckoner value – in case, the transaction value is lower than the ready reckoner value.
To promote sales, some developers are offering stamp duty discounts such as:
Commenting on stamp duty offers, senior chartered accountant, HS Aneja, an FCA and proprietor of HS Aneja & Company, explains that “In case the seller is offering the discount on the payment of stamp duty, a clause mentioning the same should be incorporated in the agreement to sell, or any document constituting the agreement to sell. Above all, in case of offers, the buyer should ensure at the time of the registration of the sale deed, that the title of the house is clearly transferred in the name of the buyer, without any condition of future obligations.”
Experts point out that stamp duty needs to be paid before or at the time of execution of the document or immediately thereafter. If the document isn’t adequately stamped, it becomes impermissible as evidence in the event of a dispute. For example, the document may be impounded by an authority under the Maharashtra Stamp Act, 1958, until the stamp duty along with the penalty, is paid by the concerned person. As per the law, it is the onus of the purchaser of a home to adequately stamp the document.
Generally, it is the buyer who pays the stamp duty but it can be paid by the seller as well. The rate of stamp duty varies according to different assets, and it is either fixed or ad valorem – the rates of stamp duty are in proportion to the nature of the assets and their sales consideration.
“Buyers can accept a full waiver of stamp duty by the seller, provided the title of the property is not affected. At the same time, the buyer should also examine that the title of the property is free from hidden and future obligations. In fact, the stamp duty is paid only for getting the title of the property transferred in the name of the buyer, in an authenticated manner” opines Aneja.
Experts emphasize that the registration of a document which transfers the rights of immovable property is compulsorily required to be stamped under the Registration Act, 1908, that is applicable all over India. Without registration, a document for sale, or purchase of immovable property, is incomplete and does not transfer the title of the asset.
Source- Housing website
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Vishesh Rai Buffett is an Indian entrepreneur and technology evangelist by heart. He is the Founder and chief executive officer of PROPERTYYY.com, the only Real Estate Consultancy Chain in India.