Home Truths: Payment of stamp duty and registration
Moneylife Digital Team 25 November 2010

Payment of stamp duty on the purchase of property is a must under the law and there is no avoiding making this payment. Registration, however, is not compulsory, says Vimal Punmiya, a leading property expert

A stamp duty amnesty scheme is under the consideration of the government of Maharashtra and should be announced some time soon, according to Vimal Punmiya, one of the country's leading property experts. Mr Punmiya, who was addressing a seminar on co-operative housing rules, hosted by Moneylife Foundation recently, encouraged people to prepare to take advantage of the scheme and save on otherwise huge penalties for non-payment of stamp duty.

He explained that stamp duty and registration of properties is one of the most vital and complicated issues in everyone's life. Yet, a large section of people were not properly informed about the rules and the process of paying stamp duty or registration. Mr Punmiya pointed out that under the Maharashtra Co-operative Societies Act, registration is not compulsory, but payment of stamp duty is a must.

Here are some of the other aspects on stamp duty and registration that Mr Punmiya dealt with.

When is stamp duty to be paid?
Stamp duty is usually paid at the time of signing of the documents and they are subsequently registered. In case stamp duty is not paid on the day the agreement is formalised, it can be paid on the next working day. However, if the stamp duty is not paid on the next day, the person would have to go for adjudication on a payment of Rs100 and then pay the stamp duty.

Penalty for non-payment of stamp duty
Earlier, the government had the power to slap a penalty up to 10 times the amount of the stamp duty, but that provision has been lifted. Now, an interest of 2% per month is charged on the stamp duty not paid and this cannot be more than 200% of the stamp duty amount due. Under an amnesty scheme the penalty is waived and a token amount is charged instead.

How is stamp duty charged?
If a property was purchased before 4 July 1980, the stamp duty is applicable on the agreement value and not on the market value. For properties purchased after 4 July 1980, the stamp duty is charged on the market value of the property as listed in the ready reckoner of rates published during the relevant period.

Types of agreements
An agreement of sale is executed when a person pays money and takes possession immediately, whereas an agreement for sale is made when a buyer agrees to purchase something and to pay the money within a specified period. Up to 9 December 1985, whatever agreements for sale executed were not liable for stamp duty. However, whenever the landlord or builder conveys the property to the society stamp duty will be applicable. Under agreements of sale, where a buyer has taken possession right away, the buyer is required to pay stamp duty from the beginning. 
 
Stamp duty on exchanged/inherited property
In case of exchange of property, where two transactions take place, stamp duty is applicable on only one property that has a higher value. A property received through inheritance by legal heir/relative is charged a stamp duty on just Rs200. 
 
Stamp duty on property received as gift
If a property is given to relatives as a gift, stamp duty on such property is charged at 2% of the value. Stamp duty is different for properties being rented out, on lease and license, or lease.

Registration of property
Registration of societies is not compulsory. The registration fee is 1% on the market value or Rs30, 000, whichever is lower. However, a bank loan usually is not granted until the society is registered.
 
After buying a property and paying the stamp duty applicable, the buyer can register the purchase within four months of the agreement. Registrations done after this period, that is in the fifth month, are charged a penalty of 2 ½ times the registration fee; in the sixth month the penalty would be five times the registration fee; in the eighth month the penalty would be ten times the registration fee; but in the ninth month there is no penalty.

In general, buyers and sellers should go for registration. However, in case a property was purchased a long time back and the seller is not available, or is not ready to come forward for the registration, the purchaser has right to register the property by making a declaration. 

Pictures of the event.

 

Comments
Rahul
10 years ago
We gave our land for development , instead of taking cash we decided to keep 1000 Sqft Flat , now society has been registered but its been 5 years we have neither Registered nor paid stamp duty of our Flat Due to Financial problem ..
We ourself live in this flat and paying maintainance and property tax from last 5 years , So what could be the consequences if we unable to Pay stamp duty and Registration...I won't sell this house in future , we will stay here forever .. What problems I could face in case I have to sell my flat in future ? ....kindly advice

[email protected]
Rahul
10 years ago
We gave our land for development , instead of taking cash we decided to keep 1000 Sqft Flat , now society has been registered but its been 5 years we have neither Registered nor paid stamp duty of our Flat Due to Financial problem ..
We ourself live in this flat and paying maintainance and property tax from last 5 years , So what could be the consequences if we unable to Pay stamp duty and Registration...I won't sell this house in future , we will stay here forever .. What problems I could face in case I have to sell my flat in future ? ....kindly advice

[email protected]
SANJAY SINVHAL
1 decade ago
I recently wanted to register my Leave & Lic agreement using the Maharashtra Givt portal. However even after online Regn, when I reached the Registrar office along with other party, we were in for a shock. You can't avoid the broker as you need 2 witness to identify you. I wonder when PAN card or other identity proof are compulsary & to be shown in original, why this ancient reqt of 2 witness still stands. This is how touts make money. It is high time that Mah Gvt relook at such rules & do away with Witness when doing registration etc. Then only e-Gov will flourish.
Nagesh KiniFCA
1 decade ago
as one who attended vimalbhai's very lucid and lively talk fielding all kinds of questions it was indeed one of the best conducted by moneylife. keep it up.
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