According to the Indian Registration Act of 1908, it is mandatory to get the property registered. The registration process is carried out on the production of the documents and payment of the registration fee. Registration fee is an amount that is levied by the government and it is a percentage of the total value of the property or the registered value of the property. The registration fee is chargeable on both old and new property. The registration fee varies from state to state and based on the person in whose name the property is to be registered as the State government provides a discount for women and senior citizens.
The various factors that can help in calculating the registration fee such as:
- Use of property, i.e. commercial or residential
- Location of the property and other geographical factors
- Person to whom the transfer is made
- Access to public services such as airport, railway, bus station, etc.
[lwptoc numerationSuffix=”dot” title=”Table of Contents” width=”full” titleFontSize=”16px” itemsFontSize=”16px” colorScheme=”light”]
How are Registration Charges Calculated in India?
As stated above there are many factors that will be considered to calculate the registration charges for properties in India. Factors related to the use of the property is an important factor as commercial buildings are charged higher than residential properties due to the additional amenities it may require.
Another factor effecting is the location of the property as it also plays a vital role in the determination of the registration charges. Properties that are located within metro cities or developed towns will be charged higher. Since the registration charges are made by the state, the state in which the property is situated is also an important factor. The type of transfer or the person to whom the transfer is made also plays a vital role.
If the transfer is made in the name of a person who is not part of the family then the registration charges are higher. On the other hand, if it is transferred to family members as gifts, etc., then the amount charged will also be lower. Discounts may also be availed if the person to who the transfer is made is a woman. Factors such as the proximity to the public services also increase the charges attached to the property.
Thus it is to state that the registration charges are calculated based on the market value of the property. If there is a variation between the market value and the agreement value, then the higher amount will be charged. Stamp duty is also to be paid for the transaction and this is done through the Stamp Duty Ready Reckoner which is published by the state government every 1st of January.
How is the flat registration value calculated?
It is important to make a note on the registration amount that needs to be made as it forms a substantial amount depending on the value of the property. The value of the property is determined by various factors that have been listed above. The value for calculating the registration charges to be paid for a flat depends either on the market value of the property or the agreement value of the property.
You are also required to make stamp duty payment and it ranges from 5-7% of the value of the property. Let’s consider the following example to understand the calculation. A bought a flat in Bangalore from B for a value of Rs. 65, 00,000. The payable amount would be 32, 50,000 as the stamp duty charges on the flat is 5% of the property value. If the flat was situated in Chennai, then the amount payable as stamp duty may have increased by 8 %.
Apart from these expenditures, you may also be required to furnish 1-2% of the property cost as court fees. Other miscellaneous expenses need to be borne by the buyer such as the notary charges and the professional fee that needs to be provided to a lawyer who assists in the transaction.
How can I save my registration fees?
Legally there are various ways to help reduce the registration charges and the stamp duty charges. Benefits can be obtained in your transaction even without engaging in illegal practices such as undervaluing your property. These legal ways to reduce the charges include:
Registration in the name of women or a senior citizen:
The many States and Union Territories in India offer benefits for women and senior citizens in their stamp duty act. For example, if a property is to be registered in Delhi, the normal value for making the registration, you are required to make an amount equivalent to 6% of the property value. On the other hand, the person shall make only 4% if the property has been transferred into a woman’s name. Thus, the buyer can avail of this benefit by registering the property in the name of his close female family member.
Amenities and the type of property:
The property with amenities such as club, gym, swimming pool, or library will add on to your registration charges. Thus it is recommended that the buyer prefers to purchase an independent house with not many floors for residential purposes as high-rise buildings have higher registration charges attached to the same. You may also prefer to purchase older buildings as benefits may be obtained in the registration charges.
Location of the property:
It is also important that the buyer carefully considers the location of the property. As stated above, the cost of buying properties in an urban area or a city may cost you a high amount. Thus it is recommended that if you don’t mind buying a property on the outskirts, then purchase as it will cost you a lesser amount. You can also say money if your property is situated in an area closer to the railway station, airport and bus stations.
- If the property is bought from a relative in the form of a gift, then that shall be mentioned as a reduction in the charges can be obtained.
Summing up, registration of the property is important to avail legal backing in the future in cases of there being any legal complications. For the carrying out of the registration processes, the person is required to furnish an amount as the registration charges and the stamp duty requirements. These amounts are generally a percentage of the property’s value. It may vary from state to state as the state government is responsible to impose the same.
If there is a difference in the market value of the property and the agreement value, then the registration amount is charged based on the higher amount. Some of the factors that affect the registration charges have been discussed above. You can also reduce the amount that is payable by making some lawful adjustments.