- What is stamp duty? Why should it be paid and by when?
|
| It is a tax and must be paid in full and on time. A delay attracts penalty at 2% per month, subject to maximum penalty of 200% of the deficit amount of stamp duty. Documents lodged with the sub-registrar/superintendent of stamps prior to any amnesty scheme attract a lumpsum reduced penalty. Documents not properly stamped are not admitted in court as evidence. |
BACK TO TOP |
- Who pays?
|
| In the absence of an agreement to the contrary, the purchaser / transferee has to pay or in case of property exchange, both parties have to bear it equally. |
| BACK TO TOP |
- On what instruments does stamp duty have to be paid?
|
| Instruments include every document by which any right or liability is or purports to be created, transferred, limited, extended, extinguihed or recorded but does not include a bill of exchange, cheque, promissory note, bill of lading, letter of credit, ploicy of insurance, transfer of shares, debentures proxy and receipt (which is charged under Indian Stamp Act, 1899). Except transfer by will (or by original nomination in a cooperative society) all transfer documents including agreements to sell, conveyance deed, gift deed, mortgage deed, exchange deed, deed of partition, power of attorneys, leave and licence agreements, agreements of tenancy, lease deeds, power of attorney to sell for consideration etc. have to be properly stamped. When a nominee transfers the flat subsequently in the name of legal heirs, such transfer also requires stamp duty. If you have purchased a flat in a co-operative society on or after December 10,1995 you have to pay stamp duty on market value as per the Ready Rechoner, issued every year on January,1. This is a public document available in any law bookshop. Market value is the value as worked out as per the Stamp Duty Ready Reckoner or the consideration stated in the instrument, whichever is higher. As per a new amendment in the Income Tac act, market value for the purpose of capital gain tax is the same as the market value for stamp duty payment. |
| BACK TO TOP |
- How is flat defined?
|
| A flat means a separate and self contained set of premises used or intended to be used for residence, or office or showroom or shop or godown or for carrying on any industry or business (and includes a garage), the premises forming part of a building and includes an apartment. |
| BACK TO TOP |
- In whose name is the stamp paper required to be purchased?
|
| Stamp papers are to be purchased in the name of one of the parties to the document, otherwise such agreement will be treated as if no stamp paper was used. However, it will not make the agreement invalid and can be enforced in law if proper duty is paid subsequently. Stamp paper is valid for six months from the date of purchase. |
| BACK TO TOP |
- What is a revenue stamp?
|
| It is a tax of Re.1 in the form of revenue stamp which should be affixed on receipt for any money or other property, the amount or value of which exceeds Rs.5000 |
| BACK TO TOP |
- Is stamp duty payable on the instrument or transaction?
|
| It is payable on the instruments. If any information essential for working out stamp duty is missing, the valuation officer can call for it. Information such as the Carpet or Built-up area, number of floors in the building, year of construction, name of the Division/Village and C.S/C.T.S number of plot of land, must be recorded in the agreement for quicker response. |
| BACK TO TOP |
- What is the rate of stamp duty?
|
Stamp duty on non-residential properties whether in a cooperative society or not is at a flat rate of 5% of the market value. Stamp duty on residential falts in a housing society and building covered under Article 25(d) of schedule I of Bombay Stamp Act, 1958, attracts concessional rated depending upon its market value as follows:
Upto Rs.1,00,000 stamp duty is nil
Between Rs.1,00,001 to Rs.2,50,000 it is 0.5% of the value.
Between Rs.2,50,001 to Rs.5,00,000 Stamp duty is Rs.1250 + 3% od the value above Rs.2,50,000
Above Rs.5,00,000 stamp duty is Rs.8750 + 5% on the value above Rs.5,00,000 |
| BACK TO TOP |
- Is it payable on transfer of a flat from husband to wife or children and vice-versa?
|
| Yes, stamp duty will be the same as applicable to conveyance. However, in the case of a gift deed between family members, the amount is arrived as per article 25 relating to conveyance or 2% od the market value, whichever is lower. |
| BACK TO TOP |
- What precautions should one take to avoid practical difficulties later?
|
Generally one copy of the exchange agreement is made and registered and then there are various pratical problems.
The following precautions should be taken to avoid complications.
- Assuming there is one Flat - A owned by Person AA and he wants to exchange it with Flat B owned by Person BB. In the Exchange Agreement the should be the clause where it states that original agreement will be considered original agreement for Flat A and will remain with its new owner Person BB and second copy will be considered original agreement for Flat B and will remain with its new owner Person AA
- Agreements should be made in duplicate. The original agreement will be charged with full stamp duty and second copy will be charged with Rs.20
- Both agreements must be registered. The orginal agreement will be charged full registration fees and second copy will be charged a nominal amount.
- Both the persons must keep their repsective copies and will be free from each other in all respects.
|
| BACK TO TOP |
- What is the stamp duty on mortgage deed for a housing loan taken from banks or housing finance company?
|
| Stamp duty is 0.5% of the loan amount. |
| BACK TO TOP |
- Some consultants claim to get the market value reduced to save a substantial amount of stamp duty. Is it correct?
|
| Many people are under the impression that some consultants can help them in reducing stamp duty. This can only be done by furnishing misleading information and will provide detrimental in future when they receive a notice for concealment of facts. A registered document can be reopened any time within ten years from the date of registration and adjudicated documents within six years from the date of adjudication. Misleading information in the agreement is an offence under the Stamp Act, punishable with fine and imprisonment. |
| BACK TO TOP |
- What are the nodes of measurement for Stamp Duty valuation?
|
Stamp Duty is charged on the basis of built-up area of the premises. Built-up area is taken to be 20% more than the carpet area. Hence all the documents must record eith carpet area or built-up area in sq.mtrs only.
There is no recognition to super built-up area or saleable area hence this should be avoided in the agreement to avoid excess payment of stamp duty.
Rates mentioned for land is per sq.mtr considering F.S.I to be 1 and rates mentioned in the agreement then it was increased by 20% to arrive at a built-up area. Also if superbuilt-up area was mentioned in the agreement then 20% was reduced from the super builtup area I.e 80% of the super built-up area was the built-up area.
The stamp duty and registration department has now withdrawn this method partially and adopted a uniform method. This mode of calculation was primarily a shortcut to an acceptable solution when built-up area was not mentioned in the document. It should never be adopted to calculate carpet area from the super built-up area or vice versa. |
| BACK TO TOP |
