Do you know the cost of Flat, land and Property Stamps and Registration charges when you buy a property? Many forget the additional expense which buyer has to bear. Let us discuss this cost in detail.
When you buy any property, then you must register in your name to claim the ownership of property. Hence, knowing about the registration cost is very much important.
Please note that this cost of Flat, land and Property Stamps and Registration charges depends on state to state. These costs are not uniform in all states. I try to concentrate on Bangalore or Karnataka (as I reside in Bangalore). However, can easily find out the cost Flat, land and Property Stamps and Registration charges of your state by visiting the respective state registration websites.
When you buy a flat, then there are mainly two costs. One is Stamp duty cost and another is Registration Cost. As I pointed above, it changes from state to state.
When you buy or sell any asset or property, then such selling must be documented. You can do it in plain paper too. However, as per legal terms, it is not valid. Hence, by paying the stamp duty as per law of the land you are claiming that the document or agreement is valid.
Stamp Duty is payable under Section 3 of the Indian Stamp Act, 1899. It is a type of tax collected by Government to validate your agreement. A stamp duty paid document is considered a proper and legal document and has evidentiary value and is admitted as evidence in courts. Document not properly stamped, is not admitted as evidence by the court.
Usually, while buying the property, it is the buyer who has to bear the cost of stamp duty cost. Respective state governemnts fix Stamp duty.
Along with stamp duty you also have to bear the cost of registration. So both the processes are very much necessary to claim the ownership of property.
As per Government portal, the current stamp duty charge for Bangalore and Karnataka is as below.
Stamp Duty-5%
BBMP,Corporation, BMRDA & other Village Areas added Cess 10% on Stamp Duty.
BBMP& Corporation added Surcharges 2% on Stamp Duty
BMRDA & other Village Areas added Surcharges 3% on Stamp Duty
Registration Charge 1% on the value of the Property
So this works out to be Stamp Duty charges as 5.6% in Urban Areas and 5.65% in Rural Areas. Registration charges is 1% of the property value.
The detailed cost of such stamp duty and registration charges are listed in Karnataka Government Portal.
Stamp duty and registration charges are calculated based on the salable value of property. Before proceeding further, let us understand the new terminology called “GUIDANCE VALUE“. It is the value declared by respective state government for each area of the state. Below this value, registration of selling is not allowed. So the salable value equals to guidance value or actual salable value (whichever is higher).
Refer the latest Guidance Value of Bangalore at our Blog Post “Guidance Value of Bangalore – How it affects property price?“.
Let us say in Bangalore the guidance value of ABC are is Rs.4,000 per square feet. Then your property registration value for that area must not be below Rs.4,000 per square feet. It may be higher, but must not be below it.
Let us take an example of a property, which is situated in area of ABC in Bangalore Urban Area. Say for example the guidance value of this area is Rs.4,000 and you bought the property at Rs.48 lakh measuring 1,200 square feet.
So in this case the value of property for sale is equal to guidance value. Now the calculation goes as below.
Stamp Duty Charges=5.6% of saleable value (Rs.48 lakh)=Rs.2,68,800.
Registration Charges=1% of saleable value (Rs.48 lakh)=Rs.48,000.
So the total Stamp Duty and Registration charges will be Rs.2,68,800+Rs.48,000=3,16,800.
Hence, the buyer of property needs to pay the saleable value of property, Stamp Duty and Registration Charges.
Now, whether we have to go ahead and register the property at a guidance value to save stamp duty and registration charges? It is mainly done in many cases to avoid the CURRENT cost. But in reality, when you sell the property, you pay more tax on such profit as a capital gains tax.
Many builders guide you to go for registration of property on guidance value to save the current stamp duty and registration charges. But here is the catch, you may currently save the cost. While selling the property, your cost of buying matters you to pay the capital gains tax. Because the property buying price is fixed by Cost of Inflation Index. Let me try to illustrate this from below example.
Let us say you bought the property at Rs.40 lakh in the FY 2000-01. You Mr.X planned to go for registration with full saleable value of Rs.40 lakh. However, your friend Mr.Y planned to save some stamp duty and registration charges. So he planned to go for Rs.30 lakh saleable value (which let us consider the guidance value of that property in FY 2000-01).
Let us consider both sold the property in the FY 2010-11 for Rs.75 lakh. In this case, who will pay more tax? Take the below calculation and see how Mr.Y currently might save some Stamp Duty and Registration Charges. However, when he sold the property, he paid the more Long Term Capital Gain Tax on it.
Do remember that as the tenure of selling goes higher the difference of taxation widens between Mr.X and Mr.Y. Few may argue that by investing Rs.66,000 (amount saved in property registration cost) may be invested somewhere to compensate the future tax loss. However, while selling a property, have you been in the same condition to sell the asset or financial instrument where you invested that saved Rs.66,000? It may or may not be and also it may or may not fetch the return which compensate the future difference of taxation.
Hence, never believe the sellers or builders logic of registering the property for less than actual cost price. Real Estate industry is mainly run by illegal money (to a certain extent it is now reduced). Hence, they force you to register at less rate and give the rest of money in cash. To be frank by doing this, the sellers or builders of properties will be in profit as they have to pay less capital gains tax.
The moral of the story is, go for full saleable value for registration, but never for lesser or on the guidance value of property. In the future, you have to bear more capital gains tax on it.
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I sold my property for 48 lakhs in July 2021. But the Buyer registered for 33 lks , as per guidance value to save his stamp duty. . I have received entire 48 laks through Cheque, money transfer and DD. Now I am opening an CG Ac in SBI before 31 july 2022.Now how much money I have to show 48 or 33 for Capital gain purpose. I like to declare the entire amount 48 lks for CG purpose. Also I am constructing a house using the entire 48 lks. Please advice me how much I have to put in CG Ac. If I put 33 as per sale deed , will remain 15 lks will attract CG or It will be added to my Taxable income ? Iam ready to put entire amount in CG Ac and will spend the entire amount for construction. PLEASE PROVIDE YOUR VALUABLE ADVICE FOR ME AT THE EARLIEST.
REGARDS
RAGHU.
Dear Raghunatha,
You are allowed to show only Rs.33 lakh (which is mentioned in Deed). For remaining you have to be responsible.
*Short note of the matter*
*
Income tax mater LTCG - Sale of apartment - pending of NOC for closure of account
ACIT, reopening the case on the pretext that the house earnings escaped to declare in the income tax return for the assessment year of 2016-17
The assessing officer reopened the assessment of 2016-17 now and added back housing income to tax fully just because the builder's joint construction agreement and not registered and only land agreement registered.
income tax mater LTCG on account of sale of property apartment.sale of apartment.
When NOC applied for closure of LTCG in 2019 the ACIT delayed the process and was going demanding documents after documents pretending that earlier documents misplaced etc..(just for information)
Then suddenly ACIT, The assessing officer reopening the assessment of 2016-17 now and add back housing income to tax fully just because the builder's joint construction agreement not registered and only land agreement registered
Issued notices earlier in october 2019 and it was replied contesting to the notice, thru e- filing
When income is appeared in TDS, AND AS WELL IN form 26AS, the earnings of gross income under LTCG not at escaped to the assessee as well to the income tax department, and the same income also disclosed in return considering provision under sec 54 CG indexation cost tax returns filed inline with the department.
ACIT not accepting the declared return value of apartment for LTCG us.54 of ITax
.ACIT deny the benefit on the ground that construction agreement not registered hence the value to be taxed us.50
ACIT, The assessing officer reopening the assessment of 2016-17 now and add back housing income to tax fully just because the builder's joint construction agreement not registered and only land agreement registerd.
Also wanted to convey that Once again the income tax department send 2nd notice under section 143(2) read with sec 147 of the IT ACT.1961(ACT) - notice dated 30/09/2020.
Good article.
However I am from Maharashtra and I need some information.
We have a land at native place ,which was on name my father and his siblings.
My father is no more , in that instance who's name need to be added on property paper ,my mother or me and my siblings.
Kindly advice
Dear Sachin,
It depends on the legal heirs of the family. Better you be in touch with the lawyer.
Hi
Some of the banks offer home loan using split DD as they honor agreement and not stamp paper, one for Govt registration, and other to vendor to avoid stamp duty and tds for over 50L. Is it fine? Or is it illegal?
Hello Sir,
If there is a plot that I have received from my parents (from division of their asset) and me and husband plan to construct a house in that plot, could we take joint home loan with property registered only in my name?
My parents also own a flat which they plan to give it to my sister. Could you let us know, what is the procedure to be followed here.
Thanks a lot for your help.
Regards,
Deepthi
Dear Deepthi,
In such a situation you can go for joint home loan. However, it usually depends on your bank. Let your parents give the falt to your sister in the form of Gift.
Dear Suraj,
The cost mentioned in sale deed matters than how the bankers paid you.
Dear Sir,
Sold my 10 year old house purchased for 40 lakhs for 120 lakhs & settled it's loan of 30 lakhs. Now I am buying my brothers 10 year old flat at a discount due to massive renovation work involved for 90 lakhs [already paid through NEFT] but guidance value is 110 lakhs. Further I am forced to borrow 7 lakhs registration charges also from my brother. What is the consideration amount to be shows in sale deed to avoid any future headache's
Rgds/Anil
Dear Anil,
Minimum should be the guidance value.
Sir I want to purchase a independent house which is built on corner plot. So do I have to pay 10% extra on registration charges for plot and house as it is corner.
Dear Vikas,
NO.
Sir,
I WANTED TO BUY A PROPERTY IN BANGALORE. PROPERTY GUIDANCE VALUE IS MENTIONED IN PER SQUARE METER Rs.33500/-AS PER GOV GAZETTE IN THAT AREA.IN SALE DEED IT IS MENTIONED 1100- SQUARE FEET SUPER BUILDUP AREA. THEN WHAT IS MY REG AMOUNT.HOW TO CALCULATE?
KINDLY REPLY
WITH REGARDS
K.RAMESH
Dear Ramesh,
I can't help and calculate for each individual. Better you directly approach the concerned sub-registrar office.
Hi,
I am planning to purchase a land in Malur District Karnataka. My plot is an corner one and builder told I have to pay 10% extra on guideline value(govt rate fixed for that area) on which sale deed will get done. I have done the sale agreement and now builder is telling along with that I have to pay 10% extra on Market Price(amount on which builder is selling) as well and this will also got to govt while registration. So now I am confused. Is there any such cases.
Below I have given an example :
I am purchasing a plot for 17 lakh from builder.
Govt value of that plot is 10 lakh.
Now builder told as it is corner plot so 10% will get add on govt value and it will become 11 lakh and on this 11 lakh registration amount will get calculate which is coming around 1.13 lakh including khata transfer.
Along with that now builder is telling to pay extra 10% on 17 lakh as well i.e 1.70 lakh which will again go to govt.
Please help me with this.
Thank You.
Dear Hari,
It is a private negotiations. Hence, there are no such rules. It is up to you to decide.
Hi I need my some information my dad s property need to be transferred asper successcer certificate what are government charges
Dear Drakshan,
Check the same with local sub-registrar office.
Hi sir,
What is the 30x40 site agreement registration cost in banglore?
Dear Rupesh,
Follow the above post or visit the nearest sub-registrar office.