Remember that both parties must comply with the conditions set out in the sales contract. Any party who violates any of the conditions set out in the Contract may be taken to court if the other party so wishes. All interested parties should also be aware that this document can be cited as legal evidence in court and that all those who have agreed to comply with the conditions are legally obliged to do so. What is stamp duty? How do I pay stamp duty? What are the registration fees. Here are some frequently asked questions by first-time buyers. That`s why, at Mahindra Lifespaces, we want to answer them and make the buying process clearer for customers. Stamp duties change from state to state and are in addition to the price of a property. That`s why it`s important to have a clear picture of the fees before buying. Stamp duty and registration fees in 6 of the major real estate hotspots in India are as follows: The total savings in stamp duty and registration fees in this case are 7 Lac – 4.69 Lac = 2.31 Lac.
According to the Law on transfer of ownership, a purchase contract, with or without possession, is not a transfer. Section 54 of the Transfer of Ownership Act states that the sale of property may be effected only by means of a registered instrument and that a purchase contract does not cause interest or costs on its object. “A contract for the sale of immovable property is a contract under which the sale of such immovable property takes place on the terms agreed between the parties” – Article 54 of Article 54 also provides that “it does not in itself create any interest in such property or costs for such property”. When a buyer buys a property, it is mandatory that he registers it in his name with the registrar. The registration document certifies the buyer as the rightful owner of the property and reduces the risk of fraud in the event of a dispute. During this process, the government charges a fee to the buyer. While the registration fee is the fee charged for the registration of property details, stamp duty is the tax levied on the legal recognition of property documents. “Any contract of purchase (contract of sale) that is not a registered deed of transfer (deed of sale) would not meet the requirements of sections 54 and 55 of the Transfer of Ownership Act and does not confer title or transfer sharing in a property (with the exception of the limited right granted under section 53A of the Transfer of Ownership Act). In 2012, in the case of Suraj Lamp & Industries (P) Ltd (P) Ltd (2) v. the State of Haryana, while dealing with the validity of proxy sales of real estate, the Supreme Court ruled as follows: From the above definition, it is clear that a purchase agreement contains a promise to transfer a property in question in the future, if certain conditions are met. Thus, this agreement itself does not create any right or interest in the property for the proposed buyer.
This absolute rule is subject to the exception in section 53A of the Transfer of Ownership Act. Article 53A provides that if the buyer has come into possession of the transferred asset while fully fulfilling its part of the obligation under the contract, the seller has no right to interfere with the asset so bestowed on the buyer. It should be noted that Article 53A provides the prospective acquirer with protection against the assignor and prevents the transferor from interfering with the purchaser`s property, but it does not repair the buyer`s ownership of the property. Ownership of the property remains the property of the seller. According to the Indian Registration Act of 1908, any agreement to transfer shares in a property worth more than one hundred rupees must be registered. Thus, if you have purchased a property under a contract of sale without an appropriate deed of sale, you will not receive any right or interest in the property that is supposed to be transferred under the purchase contract. The purchase contract may or may not lead to an actual sale of the property in question. Some of the stamp duty laws, such as the Maharashtra Stamp Act, consider an agreement to sell a property on the same basis as an appropriate deed of transfer and are therefore subject to the same stamp duty applicable to the appropriate deed of transfer or sale of a property. Because of these provisions that require the payment of stamp duty on a contract of sale, people mistakenly perceive a contract of sale as an appropriate deed of sale.
Laws relating to the registration of real estate transactions in India. In the event of the Seller`s failure to sell or take possession of the property to the Buyer, the Buyer shall be entitled to certain performance under the provisions of the Specific Reparations Act 1963. A similar right is available for the seller under the contract to require a specific service from the buyer. Mr. A buys a 1000 square foot apartment in Delhi for Rs 1 Cr. Here 1 Cr is the market value of the apartment. Now the purchase contract must be executed for the full amount, that is, 1 Cr, but you can save stamp duty by registering the property at the county rate or government value. Circle Rate or Govt Guidance Value is the minimum value at which the property can be registered. Simply put, the government`s indicative value or circular rate is the market value of the property according to the state government. It is always lower than the existing market value of the property.
In this example, the Circle Rate or Govt Guidance value is Rs 6500 psf, so according to Govt, the Circle Rate or Govt Guidance value of the property is 65 Lakes, while the actual market value is 1 Cr. By registering the property at the circular rate or Guide value, you can save a significant amount of stamp duty and registration fees. When you register the property @ 1 Cr, you pay 6 lake as stamp duty and 1 Lake as registration fee in Delhi, so the total payment is 7 lac for registration. To save stamp duty, you have decided to pay the stamp duty and registration fee @ Indicative Value or Circular Rate, and then register the property @ 67 Lakes (65 Lakes as Circle Rate + 2 Lake for parking). It is imperative to include the parking fee in the circular rate or indicative value to reach the final registration value. Therefore, the stamp duty payable is 4.02 Lac and the registration fee is 0.67 Lakes. The total payment is 4.69 Lakes. In cases where you have purchased and taken possession of a property under a purchase agreement, title to the property will remain with the developer unless a deed of sale has been signed and subsequently registered under the Indian Registration Act. This clearly shows that a title deed can only be transferred by a deed of sale. In the absence of a duly stamped and registered deed of sale, the buyer of the property has no right, title or share in any property. Signing a sales contract becomes important in light of several factors.
First, it is legal proof that in the event of a dispute, buyers and sellers enter into an agreement on the basis of which the future course of action is decided. When you apply for a home loan, the bank will not accept your application until you sign a purchase agreement. What the purchase contract creates is a right for the buyer to buy the property in question under certain conditions. Likewise, the seller receives the right to receive the consideration from the buyer in accordance with its part of the General Conditions. The deed of sale is the most important legal document by which a seller transfers his right of ownership to the buyer, who then acquires absolute ownership of the property. The Maharashtra government has reduced stamp duty on real estate for the next two years for areas covered by the Mumbai Metropolitan Area Development Authority (MMRDA). Here are the new fees that will be in effect from April 2020: The only downside to registering properties at the indicative value/circle rate to save on stamp duty is that some home loan providers such as SBI only offer home loans of up to 80% of the value of the deed of sale and not the sale value, (e.B. In this case, if the buyer benefits from a home loan from SBI, then SBI becomes a maximum loan of 53.6 lac, or 80% of 67 lakes (b. stamp duty and registration fee). In the case of other lenders such as HDFC, the loan represents 80% of the value of the sales contract, or 80% of 1 Cr = 80 Lakes in the form of a home loan.
How to save on stamp duty and registration fees is a tricky question. Before we discuss the same thing, let`s understand what stamp duty is. According to Wikipedia, stamp duty is a tax levied on documents. At the time of the transfer of ownership of the property, that is, the registration of the deed of sale, the buyer must pay the stamp duty and registration fees to the government. Stamp duties and registration fees vary from state to state. Some states offer a discount on stamp duty, for example .B. if the property is registered in a woman`s name, you can save on stamp duty. In Delhi, the stamp duty payable is 6%, but if the property is registered in the name of a woman, the stamp duty payable is 4% of the total value of the deed of sale.
Thus, you save stamp duty up to 2% of the value of the deed of sale. For the benefit of readers, I list the current stamp duties in different states. These fees are indicative and subject to change. In addition, some state governments charge different stamp duties for different areas such as city and country. Note: These fees apply to Mahindra Luminare. We hope this will bring a lot of clarity to home buyers about the two important costs when buying a property. .