Stamp Duty and Registration in India
Registration & Licenses

Stamp Duty and Registration in India

Stamp Duty and Registration Charges

 

The Indian government levies stamp duty on various legal papers such as sale deeds, conveyance deeds, gift deeds, and mortgage deeds. These agreements establish the contracting parties' obligations and rights. Stamp duty and registration fees ascertain possession and serve as proof of sale/purchase in a court of law. The sum you must pay to the authorities to register a property in your name is stamp duty. The cost of stamp duty varies based on the region's circular rates. The amount of stamp duty varies from state to state. 

 

 

The most conventional method of paying stamp duty and registration fees is to purchase physical stamp papers. One can buy non-judicial stamp paper from a licensed dealer here. Papers with imprinted stamps are known as non-judicial stamp paper. The transaction information can be written/typed on the stamp paper after purchase. The conventional method of paying stamp duty and registration fees is to buy physical stamp papers. You can purchase non-judicial stamp paper from a licensed seller. Paper with imprinted stamps is known as non-judicial stamp paper. The transaction information can be written/typed on the stamp paper once you have purchased it.

 

 

The government implemented e-stamping to prevent counterfeit stamp sheets and make stamping easier. Several states permit e-stamping. E-stamping is simply stamping done via the internet. The Stock Holding Corporation of India Limited (SHCIL) has been named the official e-stamping vendor and the Central Record Keeping Agency for all e-stamps used. To perform e-stamping,  you need to access the SHCIL website. Details on the transactions that must be e-stamped are present online. After filling the application form, you can return it to the collecting center with the stamp duty payment. Different modes of payment are adopted, including debit cards, credit cards, checks, demand draughts, and internet banking. Upon paying the stamp duty,  you would get the e-certificate. The issuing date is included in the certificate's unique certificate number (UIN). E-stamping has the advantage of being accessible and allowing for online verification.

 

 

Franking is a procedure in which an authorized franking agency stamps your document to indicate the amount of stamp duty you have to pay. One should contact an authorized bank that will function as a franking agent or a franking agency to deposit the stamp duty before you complete the transaction for which you must pay the stamp duty. 

 

 

 

People Also Read This: Gift Deed: All you should know

 

 

Stamp Duty on Gift Deed

 

The transferee or donee is obligated to pay stamp duty unless there is an agreement to the contrary. An agreement or gift deed, on the other hand, might indicate differently. The stamp duty is agreed to be paid equally by both parties in many sales and gift deeds. Get the stamp papers in the name of one of the parties to the gift, i.e., the donor or the donee; otherwise, the stamp paper will be rendered useless. If you pay the stamp duty on time, it is valid for six months from the date of purchase. Penalties, such as monetary fines, can be incurred if a document that needs stamping is not stamped correctly. If you don't pay your stamp duty on time, you'll be charged 2% every month, up to a maximum of 200 percent of the amount you owe in stamp duty.

 

 

Stamp Duty Registration Calculator

 

 

The bottom line is that stamp duty is computed based on the property's entire market value. If your asset's market worth is high, you'll have to pay a hefty fee and vice versa. If the property has both a market value and an agreement value, you will pay stamp duty on the higher of the two. Apart from the property's cost or worth, the kind of property, location, the owner's gender and age, the property's use, and the number of floors in the property all influence the property registration fee and stamp duty costs. Stamp duty officials usually utilize Stamp Duty Ready Reckoner to determine the property's value. Consider using one of the many online stamp duty calculators available to figure out how much stamp duty you'll have to pay. To receive your answer, enter basic information about your property, such as its location and total worth, and then click the "Calculate" option. To calculate the total sum required to register your property, add the cess and surcharges.

 

 

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Stamp Duty Value

 

 

Any value set by any authority of the federal government or a state government for stamp duty payment on immovable property is referred to as stamp duty value. When acquiring a property, it is necessary to set up a substantial sum for stamp duty and registration fees. Registration fees are paid to the same body that handles all the paperwork required to complete the procedure. Suppose the actual sale consideration of such land and the building is less than the stamp duty value. In that case, the stamp duty value will be considered an absolute value of consideration, i.e., as deemed selling price, and capital gain will be computed accordingly to section 50C.

 

Gift Deed: All you should know.
Wills / Trusts

Gift Deed: All you should know.

You want to gift your near and dear ones some property? You can do so by drafting a gift deed! A gift deed is a legal instrument for transferring moveable and immoveable property. The transfer of property by a gift deed is voluntary and without any consideration. A gift is generally made based on love and affection, for example, the gift of ancestral property by a grandfather to grandchildren. Section 122 of the Transfer of Property Act, 1822 governs a gift deed. Under Section 117 of the Registration Act, it is compulsory to register the same if you gift an immovable property. 

How to Draft a Gift Deed?

A gift deed should include the following information: 

  • Date and place where you will execute the gift deed. 

  • Names of the donor and donee.

  • Address of the donor and donee. 

  • What is the relationship between them?

  • What is the property being gifted?

  • Signatures of two witnesses. 

  • Signatures of the donor and the donee. 

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How to Draft a Gift Deed of Immovable Property?

A Gift Deed is mandatory for a gift of immovable property to be effective. It would help if you keep the following in mind while drafting a gift deed of immovable property:

  1. It should be in writing. 

  2. The donor must sign it. 

  3. Two independent witnesses should attest it. Hence, the witnesses must not be the donor, or the beneficiary, of the gift. 

  4. Stamp duty is payable on gifts of immovable property. The Gift Deed must be executed on stamp paper of the same value as the stamp duty payable. The exact stamp duty payable varies from state to state. It is usually 2-5% of the market value of the property. Some states offer stamp duty concessions for gifts to blood relatives. 

  5. Finally, the duly executed and stamped Gift Deed must be registered with the local Sub-Registrar of Assurances. Some states charge a registration fee, which varies from a few hundred to 1-2% of the property's market value. 

A good Gift Deed of Immovable Property should contain at least the following elements in its content: 

  1. You should describe the property you are gifting. Typically, a statement of the plot number, the locality/street, the local post office, the panchayat or urban authority, the block, the sub-district, the district, the state, and the PIN Code, will be sufficient to identify any property in India uniquely. 

  2. It may be prudent also to specify the boundaries and size of the property and the survey number of the property in the state's land records. These details can be obtained from the land records of the state in which the property is situated. 

  3. A statement of the nature of the donor's title over the property. How the donor acquired title over the property must be mentioned. The best practice is to identify the Deed by which the donor came to be the owner of the property by its registration number, year of execution, and the office where it was registered.   

  4. The fair-market value of the property should be explicitly mentioned. This is necessary to calculate the stamp duty payable on the gift. 

  5. An explicit statement that the transfer of the property has been made, for no consideration and freely and voluntarily. 

  6. A statement of acceptance by the beneficiary of the gift. This is essential because a gift doesn't take effect unless the beneficiary accepts it. 

How to Draft a Gift Deed of Movable Property

A Gift Deed is not mandatory for a gift of movable property. However, you can draft a Gift Deed for gifts of movable property too. If a Gift Deed is executed, it must be executed in exactly the same way as, the process for executing a Gift Deed of Immovable Property as explained above. 

A good Gift Deed of movable Property should contain at least the following elements in its content: 

  1.  Try to identify the property by some unique identification associated with it. For instance, a car can be uniquely identified by its motor vehicle registration details; the machinery can be uniquely identified by its invoice number and supplier details, etc. 

  2. A statement of the nature of the donor's title over the property. 

  3. Mention the fair market value of the property.

  4. An explicit statement that the transfer of the property has been made, for no consideration and freely and voluntarily. 

  5. A statement of acceptance by the beneficiary of the gift. A gift doesn't take effect unless the beneficiary accepts it. 

  6. Date, place, and time of execution.

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How to Draft a Gift Deed of Money?

No stamp duty is payable on a gift of money. A Gift Deed of Money is not required to be registered. If the parties wish to, then they can register it, but this is not mandatory. Hence, a Gift Deed of Money can very well be executed on plain paper and signed by the parties. You can also execute it by an exchange of letters between the parties containing a clear offer followed by an unconditional acceptance of that offer. 

A good Gift Deed of Immovable Property should contain at least the following elements in its content: 

  1. The amount of money being gifted

  2. Identify the money being gifted by the currency note numbers, cheque numbers, bank transfer numbers, etc.  

  3. An explicit statement that the transfer has been made for no consideration. 

Documents Required for Registration of Gift Deed

  1. The duly executed, and stamped, Gift Deed must be presented to the office of the local Sub-Registrar of Assurances for registration. 

  2. Some states may require the advocate, or registered deed-writer, who drafted the Gift Deed to affix a declaration, and their registration number, on the Deed. 

  3. A true certified copy of the Gift Deed. This copy will be retained by the registering authority. The Registration Rules of the state in which the Deed is being registered will specify the procedure for making a true certified copy of the Deed. 

  4. Proof of payment of the registration fees payable, if any. 

  5. Identity, and Address, Proofs of all the parties and the attesting witnesses.

Those who read this Article also Consulted a Lawyer about Gift Deed and Property Transfer. 

 

What is the Difference Between A Gift Deed and a Property Sale?

Once a property is transferred to you as a gift, you are its owner. The gifted property can be sold. But, a gift deed is different from a property sale. A property sale involves the payment of some money for the transfer of property. A gift deed is voluntary and without any payment of money. Hence, once you have validly registered the gift deed and are the property owner, you can sell the gifted property for consideration. 

Drafting a gift deed for an immovable property may involve many legal implications, such as tax considerations. Prefer hiring a lawyer to draft a gift deed for immovable property. 

Why you should get your rent agreement registered?
Property

Why you should get your rent agreement registered?

Looking to rent out your house to someone? Make sure that you enter into a rental agreement first. A rental agreement is a legal contract signed between the landlord and the tenant. A tenancy agreement registration serves as valid proof in case of any potential dispute. If you are renting a property for at least 12 months or more, it is mandatory to have a registered rental agreement. However, if the rental agreement is set up for less than a year, it is not legally required to have a registered rental agreement.

DIFFERENCE BETWEEN A REGISTERED AND A NON-REGISTERED RENTAL AGREEMENT

The differences between a Registered and a Non-Registered Rental Agreement are as follows:

Registered Rental Agreement

Non-Registered Rental Agreement

Rental agreements for 12 months or more.

Rental agreements for a period of less than 12 months.

Can be admitted as proof in a court of law.

Difficult to present as evidence in a court of law.

A notary may notarize a non-registered rental agreement. However, even then, it may be admissible only as proof of address and may not be sufficient to protect the parties' rights. You can prepare a non-registered rental agreement on INR 50 or INR 100 Stamp paper issued by the state.

Hence, in an 11-month rental agreement, registration is not mandatory. You would have noticed that typically, tenancy agreements are for 11 months. You may choose to enter into an 11-month rental agreement to avoid the compulsory registration requirement.

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RENTAL AGREEMENT REGISTRATION

If the rental agreement is drafted for 12 months or more, then a rental agreement registration becomes essential. You can register a rental agreement at the registrar’s office in that city. The registration fee of a registered rental agreement differs from state to state. The registered rental agreement is legally binding on both the parties and is admissible as proof in a court of law.

A landlord may rent out his property for differing periods. Stamp duty on the rented property depends upon the time for which the property is rented:

Time

Payable Stamp Duty

Rental agreements between 1 to 5 years

 

2% of thrice the average annual rent.

 

Rental agreements between 6 to 10 years

 

2% of four times the average annual rent.

 

Rental agreements between 11 to 20 years

 

2% of five times the average annual rent

Rental agreements beyond 20 years

 

2% of the six times the average annual rent.

 

Only the rental agreements of more than one year should be registered. For other rental agreements that are of less than one year (for example, 11 months), notarizing it with the notary public and paying the stamp duty is good enough and credible.

Now that we have understood the basics of rental agreement registration, let us understand the procedure for registration of a rental agreement:

  • Get a rental agreement drafted by a lawyer.
  • If you are the tenant, you need to get the rental agreement printed on a specific value stamp paper.
  • Both tenants and landlords need to sign at the designated places on the rental agreements.
  • Get the signature of two witnesses who are not related to either the landlord or the tenant.
  • After this, both the tenant and the landlord must be physically present at the sub-registrar’s office of their sub-locality.
  • Both tenants and the landlord, and two witnesses need to carry their two passport-sized photos and ID cards for verification and validation.
  • Any third person or any agent cannot carry out the registration of the rental agreement.
  • As soon as you pay the stamp duty, the registration is complete.

The registration fee for a rental deed agreement is typically around INR 1100. The rental agreement registration fee is payable regardless of the rental amount or the property value. The stamp duty charges are also applicable to the registration fee for the rent agreement.

Documents Required for Rent Agreement Registration

Following documents are required for a registered rent agreement:

  • Original ownership documents or title deed.
  • Two passport-sized photographs (tenants, landlords, and two witnesses).
  • Aadhar card
  • A government authorized identity proof (voter Id, passport, driving license, etc.)
  • If the tenant is a company, then an authorization letter from the company is required. This authorization would validate the tenant’s right to register.

Online Rental Agreement Registration

In today’s world, whether it is about buying products or choosing services, most individuals look at nowhere else but the internet. The same situation can also be seen when it comes to making a Rental Agreement. However, there are only a few states in India which allow online rental agreements. Let’s find out how registering rent agreement online works.

Process for Online Rental Agreement Registration:

The process to get an online registered rent agreement is as follows:

  • Firstly, visit the authorized government website.
  • Find out the online rent agreement option on the main page.
  • Choose your jurisdiction from the given list.
  • Provide your details required in the form.
  • Fill in the details of the other party.
  • Submit the details of tenant, identifiers, and landlord
  • Now move to the next step, i.e., rental agreement information, and fill in the details

The documents required for an online registered rent agreement are:

  • PAN card and Aadhar number of tenants, landlord, and two witnesses.
  • A biometric scanner to scan thumb.

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How to Create a Rent Agreement Draft?

A registered rent agreement sample is typically available online on many websites. A rental deed agreement should contain the following elements:

  • Names and addresses of the landlord and the tenant.
  • A brief description of the property.
  • The date by which the rent would need to be paid.
  • What would be the mode of the rent payment?
  • Exit options.
  • Amount of refundable security deposit and how and when would it be refunded?
  • What utilities are provided to the tenant?
  • What facilities can the tenant use?

A rent deed means a contract between the landlord and the tenant, and hence, it should serve not only as proof of the tenancy but also as an instrument to protect the parties' rights. Hence, it is preferred that you consult a local lawyer before drawing up a rental deed agreement and get clarity regarding registration, stamp duty, etc.