Legal angle Going by the law book

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We list some of them here. Stamp duty Stamp duty is a type of tax that needs tobe paid to the State Government on transfer, i.e. sale orpurchase of an immovable property ,through the execution of an agreement. Let's try and simplify issues pertainingto stamp duty and the related documentation required for the same. Execution ofthe instrument: When a seller and buyer sign papers pertaining to the sale ofan immovable property, (like a flat or apartment), whereby the rights of theseller are transferred to the purchaser, in such a case, the instrument is saidto have been executed. Who has to pay stamp duty: Stamp duty is payable on theagreement through which the immovable property is sold or transferred. Usuallythe purchaser pays the stamp duty. Market value of the property :Though stamp duty is payable on the agreement, the same is calculated based onthe value of the immovable property such as a flat. Stamp duty is payableeither on the market or agreement value, whichever is higher. The agreementvalue refers to the value, consideration or price mentioned in the agreement.This is the amount the purchaser will pay for the property. The market value,on the other hand, refers to the price the property could fetch if it were tobe sold in the open market. The market value is calculated based on a formula stipulatedby the stamp duty authorities. Payment of stamp duty: After calculating the stamp duty inaccordance with the formula prescribed by the stamp duty authorities, the samecan be paid in any bank that has been authorised by the state government tocollect stamp duty. You will have to request your bank for a pay order to paythe stamp duty. The bank will give you a confirmation of the payment. You willthen need to give the original agreement to the bank. Checklist for payment of stamp duty: The pay order should bedrawn in favour of that bank where stamp duty will be paid. For e.g. if thestamp duty is being paid in XYZ bank, then the pay order will be drawn infavour of `XYZ a/c Stamp Duty'. Do not sign the agreement (either the seller or the buyer)until the stamp duty is paid. Once the pay order of the stamp duty amount isgiven to the authorised bank, the bank will frank the document. This means thatthe bank will put the seal of the amount paid on the agreement, indicating thatthe stamp duty has been paid. The parties to the agreement should retain theoriginal receipt issued by the bank. This will be required when registering the agreement. Risks of not paying stamp duty: You may be tempted to ask,what happens if I do not pay stamp duty? The downside risks of not paying stamp duty on the executedtransaction may be rather serious, so ensure that this leg of the transactionis executed properly. The agreement for the purchase or sale of immovable propertyshould be carefully stamped i.e. full stamp duty should be paid on suchagreements. If the stamp duty is not properly paid, it will lead to a number ofdifficulties later such as: The agreement will not be accepted at the time ofregistration. The purchaser will be liable to pay a penalty for suchnonpayment. The title of the purchaser will not be clear and the courtswill not accept such agreements as evidence in case of litigation. Rates payable on stamp duty: Land is a state subject andhence stamp duty also falls within the state's jurisdiction. Thus, differentstates prescribe different stamp duty rates. Stamp duty is payable in the statewhere the immovable property is located. Registration When the purchase/sale of the immovable property is completed afterpaying the applicable stamp duty and both parties sign on the agreement, theagreement should then be furnished to the registration authorities forregistration. The registration authorities will verify the agreement, take thesignature of the purchaser, seller and witnesses and record the contents of theagreement. This way, the authorities give legal evidence of the transaction ofpurchase/sale of the immovable property that has been entered into between thepurchaser and seller. Advantages of registration: By registering the agreement,both the buyerand the seller stand to benefit in the followingways: The title of the purchaser becomes clear and the same can be admitted inthe court as evidence, in case of any litigation. Registering the agreementswith the registration authorities automatically makes the government a witnessto the legality of transaction. If the owner wants to take a loan from a bankagainst the property, then the bank generally insists on examining theregistered agreements and may not give a loan on unregistered agreements. Place of registration: In India, the registration usuallytakes place in the office of the Sub-Registrar, in whose jurisdiction theimmovable property is situated. Registration fees: Registration fees refer to those feescharged by the Government for registering the agreement. Such fees aredetermined by the Government and the same should be paid through a pay order atthe time of registration of the agreement. Checklist for registration: Each state has different rulesfor registration. However, the following documents are essential to have:Prescribed registration forms duly filled and signed by both parties to theagreement, i.e. the purchaser and seller. Pay order of the amount ofregistration fees. Original agreement duly stamped with the amount of stampduty paid and signed by both the parties, i.e. the purchaser and seller. Originalreceipt of the stamp duty paid. Along with the above papers, the parties should also arrangefor the following documents relating to the immovable property which has beenpurchased / sold: The assessment bill from the municipality or any othermunicipal authorities certificate as may be applicable from state to state. Certificatefrom the society giving details of the property such as the area, year of construction, number of lifts,city survey number, etc., duly signed by the secretary / chairman of thesociety. `No objection' certificate from the society stating that the societyhas no objection if the seller sells the immovable property to the purchaserand that the society has no objection in admitting the new purchaser as amember of the society. `No dues' certificate from the society that all the dues, outgoing andmaintenance and other charges have been paid by the seller as on the date ofthe sale. Any other details, documents or evidences as may be required or applicable fromstate to state. If the purchaser or seller are being represented by somethird person for the purpose of registration, then a special power of attorneyin favour of such a third person which is properly signed, stamped andnotarised should also be furnished to the registering authorities. You may also take two additional people along to theregistering authorities. These individuals can sign as witnesses at the time ofregistration. Bye-laws of a cooperative society Bye-laws simply mean thoserules and regulations that are framed for the internal working of theco-operative society. These are the rules and regulations, which the societyhas to follow to conduct its day-to-day activities. These are laws that must be adhered to while makingdecisions pertaining to the society. For instance, carrying out major repairsor installation of lifts. The members of the society are also obliged to adhereto these bye-laws of the society. Condominium rules When there are less then 10 members occupying the premisesand where a cooperative housing society cannot be formed, a condominium isformed. When an immovable property is transferred in a co-operative housingsociety, registration is not compulsory. However, in case where an immovableproperty is transferred in a condominium, then registration is compulsory. Each unit owner in a condominium has to follow the bye-lawsand rules and regulations framed for such condominiums. Propertyownership A person who purchases or holdsimmovable property in India is governed by various laws and acts. His/herrights, duties, obligations and liabilities must be in accordance with suchlaws and acts. Transfer of Property Act 1882: This act contains variousprovisions, sections and rules under which the rights of the owner of theimmovable property are governed. Indian Stamp Act, 1899: These acts are important as underthe said acts, stamp duty rates are prescribed for various documents, includingpurchase of immovable property. Any person who wants to purchase immovableproperty should ensure that the stamp duty is paid in accordance with theprovisions of the act. Income Tax Act, 1961: Any person purchasing or sellingimmovable property should also ensure that the same is done keeping in mind theprovisions of Income Tax Act, especially those pertaining to capital gains tax. Indian Registration Act 1908: The Indian Registration Act1908 lays down different categories of documents for which registration iscompulsory. According to section 17 the following transactions of immovableproperties are required to be compulsorily registered. Instruments of gift of immovable property Lease of immovable propertyInstruments which create or extinguish any right or title to or in an immovableproperty. (The author is a Chartered Accountant with Vimal Punmiya and Co. The articlewas published in Knight Frank's guide book titled Real Investment: A realestate investment guide for India )   Courtesy:HT Estates 20 th Feb 2010 For more information regarding apartment in gurgaon, bedroomapartments, buy property in india, commercial complex in india, commercial realestate, commercial space in gurgaon, dealers, flats for sale, indian realestate investment, investment options in real estate, luxurious flats, malls,office space, office space in gurgaon, online real estate, penthouses gurgaon,plots, property consultants, property in gurgaon, property india, propertyinvestment, real estate company, real estate developer, real estate gurgaon,real estate in india, real estate investment strategies, real estate market,real estate news, real estate portals, realtors, realty, residence, residentialreal estate, sell property, shop, villas, Residential Apartment   Visit www.zameen-zaidad.com          www.propertycafeteria.com  

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