Stamp Duty

What is stamp duty?
It is a tax, similar to income tax, collected by the government. Stamp duty is payable under Section 3 of the Indian Stamp Act, 1899. Stamp Duty must be paid in full and on time. If there is a delay in payment of stamp duty, it attracts penalty. A stamp duty paid instrument / document is considered a proper and legal instrument / document and has evidentiary value and is admitted as evidence in courts. Document not properly stamped, is not admitted as evidence by the court.

When is the stamp duty payable?
It is payable before execution of the document or on the day of execution of document or on the next working day of executing such a document. Execution of the document means putting signature on the instrument by the person’s party to the document.

What is the penalty charge?
Any delay in duty payment will pull in 2% per month to the maximum of 200% of the deficit amount of stamp duty. Stamp papers are to be purchased in the name of either of the parties, i.e, seller or buyer involved in the agreement, failing which will disable the stamp paper. It is said to be valid for six months from the date of purchase, only if the duty is paid on time.

Who is liable to pay?
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.

How should one sign an instrument affixed with adhesive stamp?
According to the provisions of Section 12, any person executing an instrument—affixed with adhesive stamp—shall cancel the adhesive stamp by writing on or across the stamp his name or initials. If such an adhesive stamp has not been cancelled in the aforesaid manner, such a stamp is deemed to be unstamped.

What is instrument?
Instrument means any document by which any right or liability is, or purports to be, created, transferred, limited, extended, extinguished or recorded. It is payable on instruments and not on transactions. Stamp duty should be charged on the basis of the contents of the instrument only. If any information essential for working out stamp duty is missing in the instrument, valuation officer can call for it. Information such as the area of the flat, number of the floors and year of construction must be mentioned in the agreement for quicker response.

How should instruments stamped with impressed stamp be written?
As per the provision of Section 13 of the Indian Stamp Act, 1899, any instrument on an impressed stamp, shall be written in such manner that the stamp may appear on the face of the instrument and cannot be used for or applied to any other instrument i.e., cancel the adhesive stamp so affixed by writing on or across the stamp his name or initials. If such an adhesive stamp has not been cancelled in the aforesaid manner, such a stamp is deemed to be unstamped.

Is stamp duty payable on all instruments / documents relating to the transfer of immovable property?
Except transfer by Will (or by original nomination in a co-operative housing society) all transfer instruments / documents including agreements to sell, conveyance deed, gift deed, mortgage deed, exchange deed, deed of partition, power of attorneys, leave and license agreement, agreement of tenancy and lease deeds have to be properly stamped before registration.

It is clarified that a when a nominee transfers the flat subsequently in the name of the legal heirs, that transfer instrument is to be stamped as per the market value. If you have purchased a flat in a co-operative housing society on or after 10-12-1985 you have to pay the stamp duty on market value as per the Ready Reckoner. A flat purchased through an agreement for sale on or before 9-12-1985 required stamp paper of Rs. 5 only. However a flat purchased on or before 9-12-1985 will require stamp duty on market value at the time of conveyance of the property in favour of the society. The concept of payment of stamp duty on market value was introduced from 04-07-1980 will be charged on agreement value only.

Loan

Eligibility

Home Loan

1. You must be at least 21 years of age when the loan is sanctioned.
2. The loan must terminate before or when you turn 65 years of age or before retirement, whichever is earlier.
3. You must be employed or self-employed with a regular source of income

Office premise loan

1. You must be at least 21 years of age when the loan is sanctioned.
2. The loan must terminate before or when you turn 65 years of age.
3. You must be self-employed with a regular source of income.
4. The loan can be for the purchase / construction / extension of a non-residential property.
5. A loan for renovation or improvement will be given only at the time of acquisition of property.
6. Professionally qualified and self-employed individuals can apply.
7. A minimum of 3 year’s work experience is a must.

Loan Amount

A number of factors are taken into account when assessing your repayment capacity. Your income, age, number of dependants, qualifications, assets and liabilities, stability/ continuity of your employment / business is some of them.
However, there are ways by which you can enhance your eligibility.
1. If your spouse is earning, put him/her as a co-applicant. The additional income shall be included to enhance your loan amount. Incidentally, if there are any co-owners they must necessarily be co-applicants.

2. Did you know that your fiancée’s income can also be considered for sanctioning the loan on your combined income? The disbursement of the loan, however, will be done only after you submit proof of your marriage.

3. Providing additional security like bonds, fixed deposits and LIC policies may also help to enhance eligibility.
While there is no need for a guarantor, it could be that having one might enhance your credibility with us. If so, our loan officer would provide you with the necessary details.
The final amount to be sanctioned will depend on your repayment capacity. However, what you ultimately are entitled to will have to conform within the limits fixed for each loan.
Also, when the company looks at the total cost, registration charges, transfer charges and stamp duty costs are included.

Sanctioning

Documents

1. Passport size photograph
2. Age verification: PAN card, Voters ID, Passport, License
3. Bank statement for the last six months
4. Income Documents e.g. Latest Form 16, Certified IT returns for latest 3 years
5. Admin fee cheque
6. Loan enclosure letter
7. Address Proof
8. Last 3 months salary slips (salaried person)
These are the documents required for sanctioning a loan. You may be asked to submit further legal documents if required by the Bank or its approved lawyers. Do retain photocopies of all documents being submitted by you.

Disbursement

Your loan will be disbursed after you identify and select the property or home that you are purchasing and on your submission of the requisite legal documents.
While you may be under the impression that the list of documents asked for is rather extensive, please note that it is for your own good. Each and every single document asked for will be verified and checked to ensure your safety.
This may take some time but we want to ensure a clear title and will complete all the legal and technical verifications to ensure that you have full rights to your home.
The 230 A Clearance of the seller and / or 37I clearance from the appropriate income tax authorities (if applicable) is also needed.
On satisfactory completion of the above, on registration of the conveyance deed and on the investment of your own contribution, the loan amount (as warranted by the stage of construction) will be disbursed by Bank. The disbursement will be in favor of the builder/seller.
List of documents for disbursement Standard documents:
1. Loan Agreements
2. Disbursement Requests
3. Post-dated cheques
4. Personal guarantor’s documents, as the case may be
Some documents are specific to each case.

Repayment of Loan

What is the repayment tenure?
1. Home Equity Loans – Maximum loan tenure of 15 years.
2. Office premise loan – Maximum loan tenure of 15 years.
3. Home loan – Maximum loan tenure of 30 years.

How is the loan repaid?
All loan repayments are done via equated monthly instalments (EMI).

What is an EMI?
An EMI refers to an equated monthly instalment. It is a fixed amount which you pay every month towards your loan. It comprises of both, principal repayment and interest payment.

When does the repayment start?
EMI payments start from the month following the month in which the full disbursement has been made.

How is the EMI paid?
The EMI is to be paid every month through post-dated cheques (PDCs) or direct deductions from your salary. If you are opting for PDCs, then you will have to provide 36 upfront. The PDCs are to be dated on the 1st of every month. However, if you receive your salary a few days later, no problem, there are some flexibilities of dating the cheques, which depends on that financial institution’s rules & regulations.

What if a PDC bounces?
In the case of a bounced cheque or delayed payment, charges and outstanding dues will be charged as per the prevailing company policy. You can replace old PDCs with new ones within 5 – 7 working days.

What is pre-EMI interest?
In the case of part disbursement of the loan, monthly interest is payable only on the disbursed amount. This interest is called pre-EMI interest (PEMI) and is payable monthly till the final disbursement is made, after which the EMIs would commence.

When do I pay PEMIs?
The first PEMI is payable by cheque by the end of the month in which the disbursement is madeand each subsequent PEMI at the end of every month till the commencement of EMI.

When does the repayment start?
EMI payments start from the month following the month in which the full disbursement has been made.

Application Process

The moment you decide to buy a home, you can put in your application. Yes, you can apply for a loan even before you have selected the property. The property need not even be in the same city where you are residing.
Should there be a change in your financial status or plans, you can withdraw your sanction within 6 months of approval

NRI Corner

Common questions & general guidelines

Q1. Who is a NRI?

Non Resident Indian (NRI) is a citizen of India, who stays abroad for employment/carrying on business or vocation outside India or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad is a non-resident. Non-resident foreign citizens of Indian Origin are treated at par with Non Resident Indian (NRIs).

Q2. Who is a PIO?

Person of Indian Origin (PIO) (not being a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan), who:
(a) At any time, held Indian passport, or
(b) Who or either of whose father or whose grandfather was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955)

Q3. Who is OCI?

(a) Any person of full age and capacity:

(i) Who is a citizen of another country, but was a citizen of India at the time of, or at any time after, the commencement of the constitution, or
(ii) Who is a citizen of another country, but was eligible to become a citizen of India at the time of the commencement of the constitution, or
(iii) Who is a citizen of another country, but belongs to a territory that became part of India after the 15th Day of August, 1947.
(iv) Who is a child of such a citizen, or

(b) A person, who is minor child of a person mentioned in clause (a)
Provided that no person, who is or had been a citizen of Pakistan, Bangladesh shall be eligible for registration as an Overseas Citizen of India.

Q4. Do non-resident Indian citizens/ foreign citizens of Indian origin require permission of Reserve Bank to acquire residential property in India?

Reserve Bank has granted general permission to foreign citizens of Indian origin, whether resident in India or abroad, to purchase immovable property in India for their bona fide residential purpose. They are, therefore, not required to obtain permission of Reserve Bank.

Q5. In what manner the purchase consideration for the residential immovable property should be paid by foreign citizens of Indian origin under the general permission?

The purchase consideration should be met either out of inward remittances in foreign exchange through normal banking channels or out of funds from NRE/FCNR accounts maintained with banks in India.

Q6. Are there any formalities required to be completed by foreign citizens of Indian origin for purchasing residential immovable property in India under the general permission?

They are required to file a declaration in form IPI 7 with the Central Office of Reserve Bank at Mumbai within a period of 90 days from the date of purchase of immovable property or final payment of purchase consideration alongwith a certified copy of the document evidencing the transaction and bank certificate regarding the consideration paid.

Q7. Can such property be sold without the permission of Reserve Bank?

Reserve Bank has granted general permission for sale of such property. However, where the property is purchased by another foreign citizen of Indian origin, funds towards the purchase consideration should either be remitted to India or paid out of balances in NRE/FCNR accounts.

Q8. Can sale proceeds of such property if and when sold be remitted out of India?

In respect of residential properties purchased on or after 26th May 1993, Reserve Bank considers applications for repatriation of sale proceeds up to the consideration amount remitted in foreign exchange for the acquisition of the property for two such properties. The balance amount of sale proceeds if any or sale proceeds in respect of properties purchased prior to 26th May 1993, will have to be credited to the ordinary non-resident rupee account of the owner of the property.

Q9. Are any conditions required to be fulfilled if repatriation of sale proceeds is desired?

Applications for repatriation of sale proceeds are considered provided the sale takes place after three years from the date of final purchase deed or from the date of payment of final installment of consideration amount, whichever is later.

Q10. What are the documents required for buying property?

Pan card (Permanent account number)
OCI/PIO card (In case of OCI/PIO)
Passport (In case of NRI)
Passport size photographs
Address proof
(a) Who can purchase immovable property in India?
Under the general permission granted by RBI, the following categories can freely purchase immovable property in India:

(a) Non-Resident Indian (NRI)- that is a citizen of India residing outside India

(b) Person of Indian Origin (PIO)- that is an individual (not being a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan), who

(i) at any time, held Indian passport or

(ii) who or either of whose father or whose grandfather was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955).

The general permission, however, covers only purchase of residential and commercial property and not for purchase of agricultural land/plantation property / farm house in India. OCI can purchase immovable property in India except agricultural land / plantation property / farmhouse.

(b) Can a NRI/PIO acquire agricultural land/plantation property/farm house in India?

Since general permission is not available to NRI/PIO to acquire agricultural land/plantation property/ farm house in India, such proposals will require specific approval of Reserve Bank and the proposals are considered in consultation with the Government of India.

Registration

The Sale deed or the Agreement for Sale, generally in the case of Property Transaction in Re-Sale and New Home Sales.

Step 1

The documents are submitted to the office of the Sub Registrar of Assurances within whose jurisdiction the property is located.
The authorized signatories of the seller and purchaser are required to be present along with two witnesses. Once the document is registered, a distinct document number is assigned to that document. The record of registration is kept in the office of sub registrar of assurance.

Step 2

The documents are submitted to the Reader of the Sub-Registrar of Assurances for scrutiny. After scrutiny, the Reader indicates the registration fee required, which is 1% of the transaction value or Rs. 30,000/- whichever is less on the document itself.

The payment of this fee is generally done by Payorder or through pre-determined Banks, or through the Maharashtra Government website E-payment for Registration – https://gras.mahakosh.gov.in/echallan/

After depositing the fees, the documents are presented before the Sub-Registrar in accordance with Section 32 of the Registration Act, 1908. Normally, the Seller hands over the peaceful vacant and physical possession of the property to the buyer simultaneous to the deed being presented for registration. Upon payment of the required registration fees and computer service charges in cash, as per the receipt, the document is returned within 30 minutes of getting the receipt.

The documentation shall include:

1. Document required to be registered (Original Stamp Duty Paid Copy)
2. Two passport-size photographs of the authorized signatories of both parties.
3. Photo identification of each party and witnesses i.e. voters’ identity card, passport, and identity card issued by Govt. of India, Semi Govt. and Autonomous bodies or identification by a Gazette Officer.
4. Certified true copies of certificate of incorporation of both seller and purchaser in case of Companies. (Subjective and applicable as per the requirement)
5. Copy of the latest property register card (to be obtained from the City Survey Department) to indicate that the property does not belong to the government. (Subjective and applicable as per the requirement)
6. Copy of the Municipal Tax bill to indicate the year in which the building was constructed, (Subjective and applicable as per the requirement)
7. Copy of PAN Card of Income Tax of the Seller and the Buyer annexed along with the Sale Deed.
It is also mandatory to affix thumb impression on the document to be registered in addition to signature and photograph.
1% of market value of the property (Maximum INR 30,000) + INR 20 per page of final sale deed for scanning charges (paid in cash at the time of Registration)

Step 3

After the Registration Process and Formality is done, you may get the document after a day along with the CD of the Scanned Document.

Tips:

1. Please ensure that you keep this document very safely with you. Make a few Copies of the same.
2. In case of Bank Loan, the Bank would require to take the Original Copies of the Registered Sale Deed or Agreement for Sale
3. We strongly recommend, to let the Developer or your Agent help you this as it is otherwise a lot of waste of time unnecessarily to find your way. The agent fees is applicable so please settle with him directly.
4. Please do not be in a rush and keep the next few hours free, as you never know how much time you may take in the Registration office. So if you have any other meeting or any engagement, please plan accordingly. It is difficult to have co-ordinations from Builders office, Seller and Buyer and Registration agent to all be together at one time.
5. Please ensure that you submit the documents to your Registration Agent 1 or 2 days prior to Registration for a smooth sailing.
6. Please carry sufficient cash with you and please ensure that you eat well and there is NO Proper Air-Conditioning in most of the offices and no proper seating arrangements and eating outlets around, so please ensure that you know all this beforehand.
7. In case, you are getting the Registration done by way of a Power of Attorney do ensure, that Proper Powers are given, signing is done by the Property Seller or Buyer, if you are blood Relative in case of Selling of the Property. Proper stamp Duty is fixed, Notarisation is done, thumb impression, details of the exact property, exact names in the POA and in case of POA which is done overseas, ensure the respective Consulate Stamp on the document.
8. Please ensure that you are following all the Processes which are mentioned to you by your Property Agent, Builder and do not go with your old information and friends advise as most of the times the rules are changed. Do not reinvent the wheel else the process will be derailed.