Applicability of Stamp Duty on documents/instruments:
Stamp duty is a duty directly affecting the instrument under which a transfer is made from one person to another person including transmissions.
Under Section 2(g) conveyance includes:
i) A conveyance on Sale/
ii) Every instruments
Every Decree or final order of Civil Court including High Court, RBI etc. by which property, whether moveable or immovable or any estate or interest in any property is transferred to, or vested in any other person, inter-vivos (all mutual transfers by even co-owners other than partition) and which is not otherwise specially provided for by schedule-I.
Therefore it is to be noted that he Bombay Stamp Act 1958 stipulates that all instruments executed in the state should be subject to levy of stamp duty. For our purpose we shall deal with documents by which a person transfers his interest/title/right or benefit to any other person such as:
i) M.O.U/Agreement for Sale
ii) Sale Agreement/Sale Deed
vii) Leave and License, etc.
viii) Partition deed
ix) Deed of Assignment
x) Exchange Deed/Surrender Deed
Therefore all documents under which a person’s right, title or interest in a property is transferred (the correct word is Transmitted) even after his death attracts levy of stamp duty.
(Now a days I find that several persons who are joint members approach the society with a request to delete the name of the other joint owner/joint member due to some reason, more often due to death of joint owner/joint member. As far as you are concerned though this request seems very innocent in nature it is a very dangerous proposition because by deleting a person you are transferring right, title and interest in the property running many times to crores of rupees to the other joint member/joint owner thus making him the sole owner from his previous position of Joint Owner. Further the bye laws do not contemplate deletion, it only contemplates transfer of membership. In such cases also the definition of conveyance comes into picture and the incidence of stamp duty follows.)
Article 25(d) of Bombay Stamp Act stipulates how stamp duty is chargeable on conveyance. The valuation is done on the basis of true market value declared from time to time by the State Government, say at the beginning of the calendar year for each property in a locality. Sometimes it is different from plot to plot depending on the infrastructure (connectivity to main roads, railway stations etc), frontage, utility, amenities etc. eg. Flat, bungalows, row house, galas, shops, office, go-down, garage, terrace portion attached to flat etc. etc. In case of residential flats there is an additional charge on floor raise basis and flats in buildings with lift or without lift. The stamp duty is leviable on square meter basis of the built-up area of the property. Rebate on the basis of age of the building (from the date of occupancy) as also the method for calculation of rebate/additions are also specified in the ready reckoner.
As far as society is concerned we have to only check whether stamp duty is paid and the proof of payment of stamp duty is attached. It is not within the purview of the society to object the rate of stamp duty or its valuation.
Even though the ready reckoner is published by the state Govt. end of every calendar year effective from 1st January of each year, it is suggested that the correct stamp duty be evaluated by the department of sub registrar on each document by the purchaser of flat, so that further hazels can be avoided. Even if one rupee is short paid the registrar of assurance can refuse to register the instrument when presented.
Now we will see the applicability of certain definitions in the stamp Act.
An Instrument: Instruments includes every documents by which any right or liability is or purported to be created, transferred, limited, extended, extinguished or recorded.
Instruments Chargeable with Duty: Instruments mentioned in Schedule-1 of Stamp Act which have not been previously executed by any person, executed in the state on or after the date of commencement of the Act.
Instrument mentioned in the Schedule one which are not been previously executed by any person out of the state on or after the date of commencement of the Act and is received in the State.
Indian Registration Act 1908
The Registration Act is applicable all over India except Jammu & Kashmir by a common Act called as Indian Registration Act.
Every state has separate state amendments to certain section and therefore the amendment applies to that particular state.
As per Section 17 of Indian Registration Act, the following documents having more than value of Rs.100/- are compulsorily registrable;
i) Gift of immovable property,
ii) Non testamentary instruments like Sale Deed, Mortgage etc. etc. by which any right, title or interest of an immovable property is transferred.
Though in the earlier decades there was lot of confusion that the admission of a member to the society need not be refused on the basis of want of registration of his agreement vis-à-vis payment of stamp duty. From 2001 the registration act has been amended to include the property or membership rights of a prospective member seeking admission to a cooperative society should compulsorily be registered which means proper stamp duty needs to be also paid. During the first amnesty scheme I have raised this specific issue to the Superintendent of Stamp who replied me “if the society purchases land in its name and constructs the building by itself and then there shall not be any agreement but only an allotment letter. In such cases it is the option of the member to get allotment letter with full particulars to be registered if necessary because of housing loan etc.” However after coming into practice the MOFA any property developed by a promoter by whatever name is called, the registration of the agreement of whatever name it is called as mandatory. It is worth noting that the obligation of registration is cast upon the promoter as the promoter is duty bound to enter into agreement and register the same before accepting advance payment (section-4). However this deficiency of payment of stamp duty and deficiency of nonpayment of stamp duty and non registration is a curable deficiency which can be cured by the incoming member and an opportunity to be given to him before flatly refusing his membership. It is to be noted that a registered instrument only shall have evidentiary value before any court or tribunal. The Courts are always giving weightage to a registered document even though subsequently to an unregistered document which may be of previous.
Registrations of documents are done at the office of the Registrar/Sub Registrar of Assurance.
Registration shall be done only after ascertaining that proper stamp duty as per the Stamp Act is paid on the document.
Transfer of property Act 1882, Section 5 defines transfer of property as an Act by which a living person conveys property in present or in future to;
i) One or more other living persons
ii) To himself
iii) To himself or one or more living persons
To himself: It indicates that an owner of property in one capacity may transfer it to himself to hold it as owner in another capacity that means a person may transfer his property to a trust wherein he is also a trustee.
Living person: A company, association, body of individual.
Compiled and explained by:
Adv. Mohan K Nair
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