Stamp duty and registration fee is one of the revenue generating machines of state governments! One has to pay fee for registering any document, be it marriage, company, property or birth or death! Most of us are not aware about the quantum of money to be paid towards registration. This article is about the basics of registration and stamp duty.
Where to register?
If a private limited company or Limited Liability Partnership (LLP) is to be registered, the registering authority is ‘Registrar of Companies (ROC). Upon the registration, ROC issues the incorporation certificate.
If a partnership firm is to be registered, the registering authority is ‘Registrar of Firms (ROF). Upon the registration, ROF issues Firm registration certificate
If a property to be registered, the registering authority is ‘sub-registrar’ of the concerned jurisdiction. Upon the registration, Sub-registrar affixes their stamp on the sale deed.
How much fee is to be paid during registration?
The fee is fixed by the State Governments. Government of Karnataka (GOK) decides the levy of stamp duty and registration fee for documents registered in the state of Karnataka.
The fee may be a fixed sum of money or a percentage of the value of the transaction. For example, to register a gift deed (if the donee is a specified family member), one has to pay a fixed stamp duty of Rs.1120 (Rs.1000+surcharge+cess) and Rs.500 as registration fee.
On the other hand, for registration of property, one has to pay fee as a percentage of the value of the transaction. For example, stamp duty and registration fee towards sale of property is as under –
- Stamp duty is at 5% of the market value + surcharge at 10% on 5% + cess at 2% on 5%. Which means, totally stamp duty payable is 5.60%
- Registration fee is at 1% of the market value.
So, the total amount payable towards the registration of a property is 6.60%. If the property is located in BMRDA and village limits, the amount payable is 6.65% (cess is at 3% instead of 2%)
What is Market Value?
The price at which a property is getting sold is called Market Value. What happens if the sale price is, say Rs.30 lakhs, but the buyer decides to show Rs.10 lakhs as consideration and pay stamp duty on Rs.10 lakhs? Government will lose revenue, isn’t it? In order to plug this loophole, government from time to time issues a guidance value (an indicative market value) below which a property can’t be registered. Extending the above example, what if the buyer decides to purchase at Rs.40 Lakhs? In this case, stamp duty is to be paid on Rs.40 Lakhs.
So, the market value is the price at which the property is sold or the guidance value, whichever is higher.
One can get the market value (guidance value as fixed by the government) of properties across Karnataka in the government website www.karnataka.gov.in/karigr.
Department of Stamps and Registration, Government of Karnataka is the controlling authority for registration of documents, registration of marriages, registration of partnership firms, collection of revenue to the government in the form of stamp duty and registration fee, etc. They are also responsible for issue of Encumbrance certificate, issue of certified copies of documents, etc.
Thought for the day
Life and time are the best teachers. Life teaches us to make good use of time and time teaches us the value of life.