Why Registration Of Your Property Is Important?
Registering of your property should be the top priority when you buy a house, commercial shop or land, as it proves your legitimacy to carry out any transaction. A person is considered the legal owner of a property only after he gets the property registered in his name.
If you fail to register the property, the previous owner or the developer will be considered the legal and rightful owner. Legally, the sale of the property won’t be considered valid until the sale deed is duly stamped and registered. The basic purpose of registration is to record the ownership of the flat.
The seller of the property is called the “transferor” and the purchaser is called the “transferee”. The purchaser of the property pays the stamp duty and registration charges.
If the sale deed is duly stamped and registered, then no right, title or interest in an immovable property can be transferred. In case of a dispute, you will not have any rights on the property if it is not registered in your name.
What Is A Stamp Duty Charge?
Stamp duty is a type of tax collected by the government under its jurisdiction for a transaction of property. The types of property may include agricultural, independent houses, flats, commercial units, etc. The percentage of stamp duty levied varies in different states.
Without the payment of this stamp duty, your solicitor will not be able to officially register your new house in your name, even when the house is transferred within the family. Stamp duty is normally a certain percent of the total cost or agreement value of the property. For instance: Stamp duty in Mumbai is 6 percent of the total cost or sale consideration of the property. The final amount is calculated on the basis of the agreement value, or the ready reckoner rates decided by the state government, whichever is higher. The ready reckoner rates are revised every year during the first week of January.
According to Section 17 of the Indian Registration Act, 1908, it is mandatory to register the documents regarding the transfer, sale or lease of property. For registration, the original document printed on one side along with two photocopies of the original; have to be submitted to the registering officer. The registration procedure also requires the presence of two witnesses and the payment of the appropriate registration fees.
The registration fee currently fixed for registering documents relating to property transactions is approximately 1% of the market value or agreement value, whichever is higher, subject to Maximum of Rs.30,000. The reason that there is a cap of Rs. 30,000 on the registration amount is because sometimes, the ready reckoner rates can be very high depending upon the location, size, floor, lift availability, age of the building, among other factors.
You will need to register the property within four months of the date of execution of the sale deed. In case of a delay, you can request the district registrar to grant you an extension of another four months for registration. However, there is a certain amount of penalty charged.
Under Section 80C of the I-T Act, an individual/HUF assessee is eligible to a deduction of stamp duty, registration fee and other expenses for the purpose of acquiring a house. This deduction is from gross total income. The maximum limit of deduction under Section 80C every financial year is Rs 1 lakh.