Frequently Asked Questions

Frequently Asked
Questions

Before you purchase a property, it is necessary to check the title of the seller and the relevant permissions concerning the property to be purchased. The checklist for verification of documents while purchasing under construction/ready possession property directly from the builder/developer is different than the process checklist while purchasing a resale property in a registered society or apartment owner’s association or a Pvt. Ltd. Co., as the case may be.
Process: When you are buying a flat from a builder in a building under construction, you have to check the following:

Approved plan of the building along with the number of floors.

Ensure that the floor that you are buying is approved.

Check if the land on which the builder is building is his or if he has undertaken an agreement with a landlord. If so, check the title of the land ownership with the help of an advocate.

Check the building bylaws as applicable in that area and ensure that the builder is building without any violation of front setback, side setbacks, height, etc.

Check the specifications given in the agreement to sell in the sale brochure. Is he providing the same on the ground or not?

Check the reputation of the builder.

Ensure that urban land ceiling NOC (if applicable) has been obtained or not.

NOC from water and electricity authorities also have to be obtained.

NOC from lift authorities.

Carpet Area: As per IS:3861-1975 (Reaffirmed 1992) of the BUREAU OF INDIAN STANDARDS (BIS) (government of India-recognized body for weight and measure), carpet area is the full area of a house excluding the area of all the walls in the house, kitchen, passage, toilets, 50% of the balcony area, etc. But, area, in actual practice this method is not adopted. Carpet area for stamp duty is a rentable area that is in exclusive possession of the owner. It is measured from finished wall to finished wall above the skirting level or above the dado level in case of toilet blocks and in case of an open balcony area, it is taken as 50% of the area, and a closed balcony is measured in full.

Floor Area: The floor area is the carpet area as per BIS mentioned above plus the area of the kitchen, passage, toilets, & balcony.

Built-up Area: Built-up area is the floor area plus the area of all the walls around it. In the case of a terrace flat, the area of the terrace attached to the flat must not be included in a built-up area. The exclusive terrace area should be separately mentioned. Areas of the common passage, staircase area, and lift are also not included.

Super built-up area (Plinth Area, Saleable Area):Super built-up area is built-up area plus the proportionate area of the lift, staircase, and common passage, etc. One should always insist the builder mention the actual carpet area in the agreement and not the built-up or super built-up area because the procedure of reduction of 20% from super built-up area to arrive at built-up area stand withdrawn and mentioning of carpet area in the agreement is mandatory as per the prevalent law.

It is a tax similar to sales tax (VAT) and income tax collected by the government. The stamp duty is payable under section 3 of the Bombay Stamp Act, 1958. Different amounts of stamp duty are payable for different types of documents as per Schedule I of the Bombay Stamp Act, 1958. The stamp duty must be paid in full and on time. If there is a delay in the payment of stamp duty, it attracts a penalty. A stamp duty paid document is considered a proper and legal document; as such, it gets evidentiary value and is admitted as evidence in the court. A document not properly stamped is not admitted as evidence by the court.

It is payable either before execution of the document on the day of execution of the document or on the next working day after executing such a document. Execution of a document means putting signatures on the document by the persons who are party to the document. However, it is advisable to pay stamp duty before executing the document for all practical purposes.

In the absence of any agreement to the contrary, the purchaser/transferee has to pay stamp duty, or in case of exchange of properties, both parties have to bear stamp duty equally.
From 04.07.1980, on conveyance, the purchaser is required to pay stamp duty on the market value of the immovable property transferred as per article 25(b) at the time of execution of the conveyance. Whereas, before 04.07.1980, there was no market value concept, and agreement value was accepted for stamp duty payment. Hence, the date 04.07.1980 relates to the arrival of the market value concept.
From 10.12.1985, even on an agreement for sale, the purchaser is required to pay stamp duty on the market value of the immovable property transferred as a deemed conveyance due to the explanation appended to Article 25(d) at the time of signing the agreement for sale itself. Whereas, before 10.12.1985, such an agreement for sale required a stamp of Rs.5 only, at the time of signing the agreement under article 5(h) provided stamp duty as applicable to conveyance will be payable at the time of conveyance of the immovable property in the future. Hence, the date 10.12.1985 relates to the arrival of the deemed conveyance concept.

Under the Bombay Stamp Act of 1958, stamp duty is to be paid on all documents 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, or receipt, which is charged under the Indian Stamp Act of 1899.

It is payable on the document and not on the transaction; stamp duty is charged based on the contents of the document only. If any information essential for working out the stamp duty is missing in the document, the valuation officer can call for the same. Information such as the carpet or built-up area of the flat, number of floors in the building, year of construction, name of division/village, and C.S./C.T.S. number of plots of land on which the property is situated must be mentioned in the agreement.

From 01/05/1994, stamp paper is to be purchased in the name of one of the parties to the document. If the stamp paper is not in the name of one of the parties and if it is used for preparing the agreement, then 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 the proper stamp duty is paid subsequently. Before 01/05/1994, stamp paper could be purchased under any name.

The market value of any property that is the subject matter of the document means the price that such property would have fetched if sold in the open market on the date of execution of such document or the consideration stated in the document, whichever is higher. However, for the payment of stamp duty, market value is the value as worked out as per the stamp duty ready reckoner or the consideration stated in the document, whichever is higher. As per section 50C of the Income Tax Act, the market value for capital gains tax is the same as the market value for stamp duty payment, which is worked out as per the stamp duty ready reckoner. Hence, the seller should record the actual selling price worked out with the help of a ready reckoner and avoid undervaluation to save capital gains tax. The stamp duty is payable on the market value of the property. The market value of any property is determined by the stamp duty authorities based on the stamp duty ready reckoner issued by the government every year on January 1. If the consideration amount is higher than the market value, the consideration amount will be treated as market value. However, where the property is sold or allotted by a government or semi-government body or a government undertaking or a local authority such as LIC, CIDCO, BMC, MHADA, or the Income Tax
Department based on a predetermined price, then that value is accepted as a market value for stamp duty. The stamp duty ready reckoner is a public document that is published every year by the Architects Publishing Corporation of India and is available in any law bookshop.

One can find out the market value of a property and the proper stamp duty amount on it from the Stamp Duty Ready Reckoner and Market Value of Flats/Properties in Mumbai as follows: - If the property is situated in Mumbai City (i.e., from Colaba to Mahim/Sion), one should know the division name and C.S. No. (Cadestral Survey No.) of that property, and if the property is situated in a Mumbai suburb (i.e., from Bandra to Dahisar and from Kurla to Mulund), one should know the village name and C.T.S. No. (Chain and Triangulation Survey No.) of that property. This information is available from the property card of the land on which your property is situated, and a copy of the property card is generally available from the society office or the original builder’s agreement.
From the ready reckoner, locate the valuation zone and subzone with the help of the division/village name and C.S./C.T.S. No. of the property.
From Ready Reckoner, know the market value rate per square meter, then multiply the rate by the built-up area or carpet area (if the rates are for carpet area) of the property in square meters. One will get the value. Reduce or increase this value for lift and depreciation as per valuation factors given in the Ready Reckoner to get the market value. Find out the stamp duty amount applicable as per the market value. For this purpose, the stamp duty ready reckoner and market value of flats/properties in Mumbai are published regularly by the Architects Publishing Corporation of India, and it is readily available in the market.

The department also does this procedure for a nominal fee.

The process of valuing the property and arriving at its market value and ascertaining the proper stamp duty is called adjudication.

For adjudication, one can apply to the collector of stamps along with a copy of the agreement containing details of the property.

The adjudication fee payable is Rs. 100/-.

In case of a signed document, adjudication must be done within one month; otherwise, two percent interest per month will be levied as a penalty from the date of signature.

An adjudicated unsigned document is valid up to six months from the date of the adjudication order or up to December 31 of that year, whichever is earlier.

Documents can be adjudicated at the offices of the Collector of Stamps, whose addresses are given elsewhere in the Ready Reckoner.

As per Section 17(1) & Section 17(1A) of the Registration Act, 1908, various documents relating to the transfer of movable and immovable properties are required to be registered. Registration is a legal formality wherein the document, which is required under the law to be registered, undergoes the following procedure by the Sub-Registrar of Assurance of the respective district. After the completion of these procedures, the documents are considered registered.
The Sub-Registrar of Assurance does the following:.

He verifies the document to ascertain whether it is legal to register such a document.

He further verifies that full stamp duty is paid on that document before registration.

In his presence, all parties executing the document admit that they have executed the document presented for registration. Parties who are present and admit executing the document are then personally identified by two independent witnesses. All the parties and all the witnesses present again sign in the presence of the sub-registrar on an additional page attached to the document.

Parties to the document are photographed, and their left-hand thumb impression is taken, and such photographs and thumb impressions are affixed on additional pages attached to the document apart from color photographs and thumb impressions that a person affixes in the agreement while executing the document. On 06.06.2007, photographs, proper identity proof, and thumb impressions of witnesses were also taken and attached to the document.

He puts his official seal on each page and puts a unique numbering block with a page number on each page of the document, including the additional pages. On the last page, he signs the document as being registered.

After completing the above procedure, he records the content of the document, including the additional pages, either by photocopying the content or by scanning the content of the document. He permanently retains the photocopy of scanned images in his records so that in the future, whenever a copy of the document is required, it can be obtained. This copy becomes a public document, which anybody can inspect by paying inspection fees and also can procure a certified true copy.

After taking a copy of the document, as mentioned above, on the record and after completing the above formalities, the original document is handed over to the party for obtaining one photocopy of the registered document. The photocopy should be taken on only one side of the paper, and the paper should be 90 GSM thickness. There should be butter paper between the two sheets on the photocopy. After the original and butter photocopy are given back to the sub-registrar, he verifies the original and photocopy, and then the original document is returned to the party presenting the document for registration. This completes the process of registration, which takes about 30 minutes in Mumbai.

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