A stamp duty is a kind of tax that is levied on the transactions concluded by way of documentation or instruments. The tax was sealed by the Bombay Stamp Act (1958).
As per the regulations of this Act, the buyer must pay a 5% stamp duty on the cost of the flat. This payment is a pre requisite for the full ownership of property and the consequences for evasion of stamp duty can even lead to imprisonment. For residential spaces that cost above Rs. 500,000/-, the purchaser must pay an excess stamp duty of Rs. 7650/- (plus 5%). For commercial spaces, the stamp duty is simply 5%. However, these rates are subject to change.
Once the buyer decides to purchase a residential property, the stamp duty is calculated according to the agreement value or the market value, whichever is higher. The investor will then need to obtain a pay-order, which must be addressed in favor of "Superintendent of Stamps, Mumbai". After the submission of the pay-order, the agreement is completed and signed by all parties.
The process of registration involves the submission of transaction documents (copies) to the required governmental officer for preservation. Once the stamp duty has been paid on a document, it has to be registered under the Indian Registration Act (1908) with the Sub-Registrar of Assurances of the locality of the property. Unless this procedure is completed, the investor does not have full ownership of the property.
The original copy as well as two photocopies of the document must be submitted to the Sub-Registrar of Assurances. The procedure also includes a registration fee for properties costing more than Rs. 30,000, which is fixed at 1% of the market value or the agreement value, whichever is lower. Once again the value is subject to change. The procedure can only be completed under the presence of two eye-witnesses. When a receipt with a distinct serial number is issued, the procedure is complete.