Discussed in this article are some crucial aspects of land purchase and land registration in India that buyers should be aware of
As is true of all immovable properties, a land registry is also compulsory, for a new owner to attain legal ownership over the property. The Registration Act, 1908, makes it mandatory for all properties worth over Rs 100 to be registered in the government’s records. Land registration in India is a lengthy process that entails payment of stamp duty and registration charges to the government and getting all the paperwork in place that establishes that a new buyer is now the owner of the land, apart from taking the actual possession of the land.
In this article, we address some crucial aspects related to the land registry in India, in order to make a land buyer’s journey less complicated.
Under the Indian Constitution, the land is a state subject. This means on all immovable properties, states have the authority to make laws, impose taxes and collect them accordingly. While the authority to make land registration-related rules and levy land registration charges broadly lies with the state’s revenue department, city administrations act as their representatives in different districts. The inspector-general of stamps and revenue (IGRS) is the authority that collects stamp duty and registration charges, on behalf of the state.
Now suppose, you are purchasing land in Noida. In this case, you will be making the application for land registration with the IGRS Uttar Pradesh and paying the stamp duty and registration charges on the purchase through the sub-registrar office of the area concerned.
Land Registry registration fees
Land registry stamp duty in India
Since the freedom to impose land taxes lies with the states, the stamp duty on land purchase varies from one state to another. Depending on the state where you have purchased the land in India, you may have to pay stamp duties ranging between 3% and 14% of the transaction value.
This brings us to the question, what is transaction value? Transaction value is the amount you are paying to the seller, in exchange for the land. So, if you are paying Rs 10 lakhs to the seller, based on the market value of the land parcel and the stamp duty on the land transaction in your state is, say, 10%, you will be paying Rs 1 lakh.
Land registry registration charges
Typically, states ask the buyer to pay 1% of the land value as the registration charge, along with the stamp duty. Some states also ask for a flat fee, to complete the registration of your land purchase.
Land registry: Who pays stamp duty and registration charges?
It is always the buyer who pays the stamp duty and registration charges on land purchases in India. On his part, the seller also has to pay capital gains tax on the amount he receives through the sale and is thus, not liable to pay stamp duty or registration charge.
Documents needed for land registry
Since the chances of forgery are much higher in land transactions, when compared to transactions of properties of other kinds such as flats, apartments, and independent homes, there are a large number of documents that the seller has to produce, to get the land transferred under the name of the new owner in the government’s records. Apart from documents that prove the identity and establish the residence of the buyer, the seller, and the witnesses, documents establishing the legal ownership of the seller on the said land have to be produced before the sub-registrar, along with the stamp duty, registration charge, and the application for land registration.
While the list below is only indicative and not exhaustive, here are some of the key legal documents you will have to produce in the sub-registrar’s office at the time of land registration:
- ID proofs of the buyer, seller, and witnesses.
- Address proofs of the buyer, seller, and the witnesses.
- PAN cards of the buyer and the seller.
- Photographs of the buyer, the seller, and the witnesses.
- Mother deed or parent document.
- Sale agreement.
- Sale deed.
- Khata certificate.
- Latest tax receipts.
- Encumbrance certificate.
- NOC from the bank, in case there is an existing debt on the land.
- Stamp paper of requisite value.
- Receipt of stamp duty payment, if the duty has already been paid using online channels.
- Receipt of registration charge payment, if the duty has already been paid using online challans.
- Receipt of TDS payment.
Is online land registration possible?
In the past half a decade, a large number of states have launched initiatives to enable online registration of land and other property in India. However, only a certain portion of the land registration process can be completed online. For the final approval on your land registration application, the buyer, the seller, and the two witnesses have to physically visit the sub-registrar’s office (SRO) along with the original and copies of all the documents.
Land registration process
Using the respective state’s official websites for the same, an individual can fill up the application form, pay the stamp duty and registration charges and submit copies of the necessary documents, before booking an appointment at the SRO. This saves a lot of time and effort because authorities get time to verify the details of the transaction before the final land registration.
On the day of the appointment, the sub-registrar again verifies the original documents and takes the biometric check on the buyer, seller, and the witnesses.
Land registration: Latest news updates
New rules for farmland registration in Telangana
July 28, 2021: The Inspector-General of Stamps and Registrations (IGRS) in Telangana has instructed all the registering authorities in the state to not allow registration of farm plots if its area is less than 2,000 sq meters or 20 guntas. For land registration, the registration authorities should also insist on approved layout copies, if the farm plot is close to a new road.
On July 20, 2021, the Telangana government also hiked the stamp duty on land registration from 6% to 7.5%. The hike in inland registration rates came into effect on July 22, 2021. Even if the slots had been booked before July 22, 2021 buyers would have to pay stamp duty on land registration according to the new rates, if the date of final registration is July 22, 2021, or later.
Maharashtra may revise land values, hike registration charges
July 13, 2021: The Maharashtra cabinet is in process of hiking stamp duty and registration rates for land. If these charges are hiked, buyers will have to pay 7.5% of the land value, as against the existing 6%. Recall here that the state had announced a temporary cut in stamp duty to boost property sales in 2020.
TN provides relief to victims of fraudulent land transactions
July 9, 2021: In a move that would come as a great relief to landowners who were victims of fraudulent registrations and were unable to dispose of their land, the inspector-general of registration (IGRS) in Tamil Nadu has directed registration officials to allow genuine owners of a property to proceed with further registration. In its circular dated July 9, 2021, the state has said that these instructions must be followed diligently and that an adverse note will be taken, in case of any neglect of the order. A similar circular was issued by the state in 2018, too. However, officials failed to follow the orders.
West Bengal cuts stamp duty on land purchase
July 7, 2021: In a move that would lower the cost of land registration in the state, the West Bengal government has announced a 2% reduction in stamp duty on land registration. This means that buyers registering their land in the urban areas of the state will now pay 4% as stamp duty, as against 6% earlier. Similarly, buyers purchasing land in rural areas have to pay 3% stamp duty now as against 5% earlier. In case the worth of the property is over Rs 1 crore, the buyer will have to pay an additional 1% stamp duty.
Land purchases increase in Karnataka, post relaxation of norms
July 3, 2021: After the state government, in September 2020, removed most restrictions on the purchase of agricultural land in Karnataka, property transactions here have grown exponentially, in spite of the fragmented lockdowns following the second wave of the Coronavirus pandemic. In the first six months of 2021, land registration in Karnataka grew by over 67%, compared to the first six months of 2020, enabling the state government to generate better revenue through land registration, at a time when property registrations have dipped in most other states.
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