When buying a home, it's important to calculate the additional costs such as stamp duty and property registration charges. Let’s understand what they mean.
Stamp duty is a fee levied by the government on documents that record the purchase or transfer of property. A registration of document before SRO, on the other hand, officially records the transfer of ownership of a property from one party to another.
These transactions involve a certain fee imposed by the State Government. Grihum Housing Finance Limited (Grihum) helps you understand the details.
How are the charges calculated?
The Stamp Duty and Registration Fee are regulated by the Indian Stamp Act (IS Act), 1899, Registration Act, 1908 and the State Laws under the Indian Stamp Act (IS Act), 1899. The amount of Stamp Duty and Registration Fee is determined on the value of the property and the classification of documents under relevant Articles under the Stamp Act as defined by each state.
What’s the Sub-Registrar’s role?
When the document is presented before the Sub Registrar office for registration, the Sub-Registrar classifies them under the relevant Article, estimates the document value and communicates the stamp duty payable to the parties concerned. The documents are registered on payment of stamp duty and registration fee.
What factors affect stamp duty?
- Property value or consideration: Stamp duty is usually calculated on property's purchase value or market value, whichever is higher.
- Property age: Older properties may sometimes attract lower stamp duty rates.
- Location: Urban areas generally have higher stamp duty rates compared to rural areas.
- Purpose of property and rates: Residential properties may have different rates as opposed to commercial properties. Different rates may apply to agricultural land and industrial land.
- Amenities and facilities: Properties with additional amenities such as swimming pools, clubhouses, sports facilities, etc., may attract higher stamp duty rates.
- Penalty: A delay in payment of stamp duty attracts a penalty.
- Gender and age: Some states offer stamp duty concessions to women or senior citizens.
- Government policies and incentives: Governments may offer discounts on stamp duty rates for certain categories of buyers (e.g. first-time homebuyers, affordable housing schemes).
- Regulatory changes: Changes in state government policies or amendments to the Stamp Act can impact stamp duty rates.
Where property registration is concerned, the sale deed, which records the sale and transfer of property from the seller to the buyer, is the key document. The parties involved must sign it in the presence of witnesses as required by the law. It’s advisable to consult a lawyer to draft the sale deed to ensure all legal requirements are met.
Do PMAY schemes have too much documentation?
Certainly not. Under the Pradhan Mantri Awas Yojana (PMAY), which is a government initiative aimed at providing affordable housing, the registration of property documents follows the standard legal procedures prescribed by the state government where the property is located.
Beneficiaries must submit various documents such as identity proof, address proof, income certificate, proof of residence, etc., as required by the implementing agency or bank to avail of PMAY benefits. Upon registration and verification of documents, the subsidy amount under PMAY is disbursed directly to the beneficiary's loan account by the government or housing finance company, depending on the scheme’s terms and conditions.
Conclusion
To summarise, a registered document is conclusive proof of a transaction's legality. The transaction details are recorded in official government records, making it difficult for unauthorised changes. It establishes the ownership rights of the buyer and ensures that the property transfer is legally recognised by the government. More importantly, it helps in preventing fraud and disputes on property ownership.
