Larger stamp responsibility could dampen consumers’ spirit

Higher stamp duty may dampen buyers’ spirit

Proposed hike in steerage worth for property registrations could impression realty market considerably. A glance by R.P. Deshpande

By the time you learn this text, the State authorities may need elevated the steerage worth for property registrations, making a giant gap your pocket.

For switch of immovable properties from one individual to a different, by the use of sale, present, partition, launch, trade or some other mode, it’s obligatory to register such conveyance deeds (like Sale Deed, Present Deed and so forth.) on the jurisdictional Sub-Registrar’s workplace.

This attracts stamp responsibility and registration price on the sale consideration or property worth, because the case could also be. The stamp responsibility and registration price is a significant income earner for the exchequer.

Presently the stamp responsibility and registration construction is indicated within the desk under.

In village panchayat areas, the cess price is 3% and therefore the overall stamp responsibility and registration price might be 6.65% of property worth. The purchaser must submit stamp responsibility and registration expenses in 3 separate Demand Drafts (DDs) favouring the jurisdictional Sub-Registrar, one for quantity calculated @ 5.1% (stamp responsibility + cess) of property worth, second one for 0.5% of property worth (surcharge) and third for 1% of property worth (registration price).

If stamp responsibility of 0.1% has been paid whereas executing the sale settlement, will probably be set-off in opposition to stamp responsibility payable on the time of registration of sale deed.

Since ages, sellers and purchasers have been declaring lesser worth than precise sale consideration to avoid wasting on stamp responsibility and registration prices, thus inflicting enormous loss to the federal government. By declaring lesser sale value, the purchaser saves on stamp responsibility and registration prices (6.6% on the undisclosed sale worth) and the vendor saves on capital positive factors tax, which arises on the sale of capital asset (property).

It has turn into a routine process to gather differential quantity (i.e., precise consideration much less steerage worth calculation) in money, which has considerably contributed to unaccounted cash within the economic system.

Therefore to optimise income collections from stamp responsibility and registration prices and to curb technology of unaccounted cash, the State authorities, via the Division of Stamps and Registrations, points steerage worth (in some States, generally known as stamp responsibility worth or circle worth) for every kind of properties locality clever. For arriving at land worth, due weightage might be given to zone, street width, nook property, business worth and so forth. and to reach on the worth of constructing, sort of development, specs, age of constructing, depreciation and so forth. are thought of.

The goal of fixing steerage worth is to evaluate the closest market worth of the property. To present the advantage of doubt to sellers and purchasers, usually the steerage worth fastened could be 10-20% lower than market worth.

Contemplating the rise in property worth over years, periodically (usually as soon as in two years), the Division of Stamps and Registrations revises the steerage worth of all properties.


The steerage worth for any property might be verified from the Sub-Registrar’s workplace or from books (revealed and printed by non-public publications) obtainable in guide shops.

It could be famous that the Sub-Registrar could enable for any registration, if the property worth proven is lower than the steerage worth fastened by the federal government, however makes it obligatory to pay stamp responsibility and registration prices calculated as per steerage worth. In such a case, as per Earnings Tax guidelines, the distinction between the precise consideration and steerage vlue is taxable below ‘Earnings from Different Sources’ within the arms of the client.

However, when the precise consideration is lower than steerage worth, the steerage worth could be deemed as sale consideration and accordingly vendor has to make provision for Capital Positive aspects Tax.

If sale consideration proven is greater than the steerage worth, the Sub-Registrar will welcome such an instrument and cost stamp responsibility and registration price on precise consideration, thus incomes extra income for the federal government.

It’s reported that the steerage worth will go up by 5-20%.

Further burden

Allow us to see what could be the additional burden of stamp responsibility on properties price ₹50 lakh at completely different localities in Bengaluru with 5%, 10% and 20% improve in stamp responsibility and registration prices (see desk at left).

You don’t have any selection than to embrace the change when it comes to improve in steerage worth.

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