If you have finalised on a property and if you would be going through the registration process soon, then please read on.
Before we understand the registration process, few helpful insights:
Who can buy property in India?
- NRI, a citizen of India residing outside India
- PIO, Person of Indian Origin who at any time held an Indian passport or whose Father or Grandfather was a Citizen of India (not allowed if currently a citizen of Pakistan or Bhutan or Bangladesh or Sri Lanka or China or Afghan or Iran or Nepal)
Who is a Sub-Registrar and what are his responsibilities?
A Sub-Registrar is a Government official with certain responsibilities, every district will have few Sub-Registrars assigned to their respective jurisdiction.
The duties and responsibilities are:
- Registration of Documents
- Granting certified copies and Encumbrance Certificates
- Registration of Hindu Marriage
- Solemnisation and Registration of Special Marriage
- Granting Extract of Birth and Death
- Ex-Officio stamp Vendor
What is Stamp Duty?
Stamp Duty is a tax collected by the Government under its jurisdiction for the purchase of property.
Some important points on Stamp Duty:
- Stamp Duty was introduced in India in 1899 and is payable under section 3 of the Indian Stamp Act, 1899
- Acts as a legal doc in the court of law for evidence of sale or purchase of property
- Varies from one state to another, collected as a percentage of the sellable value of property during registration.
- For payment of Stamp Duty, Stamp papers equal to the value of the Stamp Duty must be bought either in the name of the buyer or seller, this Stamp paper is valid for six months.
- Stamp Duty can be paid either before the execution of the document or during or the next working day.
- Stamp Duty is paid to the State Govt, either by buyer or seller during transfer of ownership of property. Govt. has come up with a new online portal called Khajana – II https://k2.karnataka.gov.in/K2/index_en.html. In case of exchange, both seller and buyer must share the cost equally.
- Stamp Duty must be paid on time and in full, in case of delay, there is a penalty of 2% of the remaining amount the buyer has to pay every month, and a maximum of 200% on the unpaid amount.
What are the registration charges?
Along with Stamp Duty, buyer has to pay Registration Charges,
- Registration charges vary from state to state, and is calculated as a percentage of the sellable property.
- The calculation of stamp duty and registration charge is done based on the Guidance value (decided by State Government based on location of property). Guidance value is the minimum value on which the property has to be registered, it is the saleable value of the property.
- States also calculate Stamp Duty and Registration Charge based on type of land or building (independent houses or apartments)
Property registration in India is governed as per section 17 of the Registration Act, 1908
The steps involved are:
VERIFICATION OF THE TITLE OF THE PROPERTY
- Most cases, property is bought either from the developer or secondary sale
- Obligation of this step lies on the buyer’s side
ESTIMATION OF PROPERTY VALUE
This is required to pay the Stamp Duty
PREPARATION OF STAMP PAPERS
Buy non-judicial stamp papers equivalent to the value of the stamp duty. Stamp papers can be purchased online (e-stamp paper) or from licensed stamp vendors.
GETTING THE SALE DEED READY
- Preparation of sale deed and typing it on the stamp paper
- Prepared by an authorised attorney on behalf of the buyer
- Subject on sale deed varies based on type of transaction such as lease, sale, rent, etc.,
PAYMENT OF STAMP DUTY AND REGISTRATION CHARGES
- After the stamp papers are ready, you can pay the stamp duty through the collector of stamps or online payment
- Registration charges have to be paid before the registration of the property
APPROACH THE SUB-REGISTRAR FOR REGISTRATION
- Take an appointment with the sub-registrar for registration of sale deed
- Go to sub-registrar office with two witnesses
- All parties involved must carry photo and ID
- Carry two copies of the deed along with the original
- Sale deed vetted by an Advocate
- ID and Address proof
- DD or cash K2 Challan for the payment of Stamp Duty
- Passport size photographs
COMPLETION OF REGISTRATION
- After all documents are verified, the registration is complete.
- The Sub-Registrar will hand over the original documents while maintaining a copy with him or her.
Note: Documents must be submitted for registration, within four months from the date of execution. And if the property registration is not done, the buyer is not recognised as an owner by law.
Saleable value of property = Guidance Value (estimated by State Govt.)
Total cost of property = Saleable value + Stamp Duty + Registration Charges
Stamp Duty = Stamp Duty percentage decided by the Govt x Saleable value
Registration Charges = Registration Charge percentage decided by the State Govt x Saleable value
For a more elaborate in-person discussion, please feel free to call us.