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All about Vasai and Mumbai Suburb

WHAT is stamp duty? Why should it be paid and by when?


STAMP DUTY

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 lump sum reduced penalty. Documents not properly stamped are not admitted in court as evidence. It is payable before execution of the document or on the day of execution of document or on the next working day. Execution of a document means putting signatures on the instrument by persons party to the document.

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.

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, extinguished or recorded but does not include a bill of exchange, cheque, promissory note, bill of lading, letter of credit, policy 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 co-operative 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 agreement, agreement 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 heir, such transfer also requires stamp duty.

If you have purchased a flat in a co-operative society on or after December 10 1985, you have to pay stamp duty on market value as per the Ready Reckoner, issued every year in 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 Tax act, market value for the purpose of capital gain tax is the same as the market value for stamp duty payment.

How is a 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.

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.

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. 5,000.

Is stamp duty payable on the instrument or transaction?
It is payable on 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 Division/Village and C.S./C.T.S. number of plot of land, must be recorded in the agreement for quicker response.

What is the rate of stamp duty?
Stamp duty on non-residential properties whether in a co- operative society or not is at a flat rate of 5% of the market value. Stamp duty on residential flats in a housing society and buildings covered under Article 25(d) of Schedule I of Bombay Stamp Act. 1958, attracts concessional rates 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. 1,250 + 3% of the value above Rs.2,50,000. Above Rs.5,00,000 stamp duty is Rs.8,750 + 5% of the value above Rs.5,00,000.

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 practical 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 there should be a clause where it states that original agreement will be considered original agreement for ‘Flat-A’ and will remain with it’s 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 only with Rs.20. – Both agreements must be registered. The original agreement will be charged full registration fees and second copy will be charged a nominal amount. – Both the persons must keep their respective copies and will be free from each other in all respects.

Note: These may be got verified from legal experts or financial institution. Evasai.com will not be responsible for any inaccuracies and deficiencies in these.

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October 20, 2007 - Posted by | Property news & articles

17 Comments »

  1. Hi.

    Greetings from John – Bhayander – Mumbai/Thane.

    My mom had purchased a flat in the year 1985 while the building was under construction in Bhayander and thereafter the builder left the said building leaving it as it is for the next couple of years, near about the year 2000 some builders took over and developed the building, booked new clients for the flats/shops and registered the building.. however they did not include my mom in the members of the society till today.. she currently is not a member of the said society and does not get any services of the society. she intents to get a new seperate/direct water connection from MBMC and thereafter resale the said flat.. please advice if she is on the right track..

    Comment by John | October 23, 2007 | Reply

  2. our builder sold four flats in year 1989/90,he did not register the deed or pay stamp duty.now he is advising us that we should,pay up the stamp duty and do due process of law and there after he will transfer the title or conveyance etc to us.we approached local office to do the needfull we were advised that penalty will come to more than a lac of rupees per flat holder which is high by our standards. an openion was circulated that some amnesty may be given in case govet so chooses,CAN YOU PL SAY IF SUCH AN AMNEST IS INOFFING AND WHAT OTHER COURSE WE SHOULD UNDERTAKE

    Comment by kowshik | November 4, 2007 | Reply

  3. There is slight confusion w.r.t. to rate of Stamp Duty. some website claims it stands at 8% for a redsidential flat purchase in south mumbai and some claims its at 5%. Please clarrify. Also state whether there is any rebate (in the amount of stamp duty) available if the co-op society is 30 years old.?

    Comment by Heman Ajmera | November 21, 2007 | Reply

  4. Respected Madam / Sir,

    I have purchased a flat last two years back till date builder did not give the documents and as well as he did not perform the society please guide us what to do in this case.

    Comment by Ram Kumar.Palivela | December 5, 2007 | Reply

  5. Your website is popular and helpful can you help me with this query Iam from Dubai NRI and one builder in vasai was telling me that there is also VAT apart from service tax registration cost stamp duty society and maintenance . So far nobody had ever asked me for VAT why is he asking this he must have not paid for which he is asking me to pay for him. Can you please suggest atleast who to consult in this matter in mumbai India. Thanks Regards

    Comment by Nishat | January 16, 2008 | Reply

  6. I am planning to buy a 1BHK (area 500 built-up) in a 20 year old building on resale basis for a consideration of Rs.410000/- at Badalapur (West) Maharashtra. What is the rate of stamp duty payable. The seller in 2006 when he purchased the flat has already paid stamp duty on considration of Rs.381000/-. Please advise immediately.

    Comment by chandrasekhar | April 3, 2008 | Reply

  7. Dear Sir,

    My Father has purchase a flat in 1982 at that time the building was under construction. Agreement of Sale was executed. And possession was given in 1983. No conveyance is made till date. A Co-Operative Society was formed then. Now that we are shifting and we have to sell the flat what is the procedure ? Do we need to pay stamp Duty on the purchase we have done in 1982-1983 with current market rate.
    Please advice as we have a customer ready for the flat.

    Thanks
    Deepak

    Comment by Deepak Lodaya | April 29, 2008 | Reply

  8. What was the rate of an apartment per sqft in Chimbai Village Bandra (W) Mumbai in 1998

    Comment by Frank Matthias | June 17, 2008 | Reply

  9. your website is very popular which give us to learn some thing . i would like to know more about maharastra stamp duty please give me the site or more about it

    Comment by pranay | July 17, 2008 | Reply

  10. i want to buy a residential resale property in vithalwadi near kalyan. it is a resale property. can u give me what inquary needed before purchaging that property.

    Comment by shabnam | July 23, 2008 | Reply

  11. Please tell me how to return excess stamp papers ?

    Comment by Ram | August 7, 2008 | Reply

  12. Hi.

    Greetings from Tapan, Phulbani
    I would like to know more about Orissa Required about transaction of exceeding Rs. 5000/- of Salary, labour payment, or other transactions, Revenue stamp duty about , sramps on reciept, more than Rs. 5000/- or less than please give me the site or more about it.

    Comment by Tapan Prasad Acharya | August 11, 2008 | Reply

  13. My Father has purchase a flat in 1982 at that time the building was under construction. Agreement of Sale was executed. And possession was given in 1983. No conveyance is made till date. A Co-Operative Society was formed then. ? Do we need to pay stamp Duty on the purchase we have done in 1982-1983 with current market rate.
    Please advice

    Comment by Mitesh shah | September 2, 2008 | Reply

  14. We purchased our flat in 1968 and the building has done the conveyance. But our agreement has just a 3 rupee stamp on it and is Not registered , do we have to pay the stamp duty and register our agreement , our agreement value of the flat was then 17000 , so what will be the charges incase we have to pay now , in short what must be done in our case do we have to pay or Not pay at all. And if yes what are the documents required during payment and where must it be done since we reside in Vile parle West. Thanks

    Comment by Warren D;souza | September 22, 2008 | Reply

  15. I had located a 10 yr old building at Dewanman,vasai(w),on what amount will the agreement/stamp duty be calculated depending on govt land value of dewanman or on building structure valuation,and what all document to be taken and considered from seller as buyer point of view,pl advice.

    Comment by Madhavan | December 28, 2008 | Reply

  16. hi,

    i wanted to know what is the rate of stamp duty and registration plus the insurance charges to buy a flat. plus also tell me form where can i check whether the papers that the builder is giving is all legal.

    Comment by bhagirathi | January 12, 2009 | Reply

  17. dear sir / madam , please advice , if a receipt of money of rs. 5 lacs does not bear required revenue stamp ,is admissible in evidence and whether a suit may be instituted on such receipt. any case law on this point may be mentioned. thanking you . m m bansal

    Comment by m.m.bansal | February 5, 2009 | Reply


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