Key points related to Stamp Duty and Registration

Although applicable at multiple junctures, this article focusses on those aspects of Stamp Duty and Registration that come into play when a property is exchanging hands, i.e. a buyer purchases a property by executing 2 documents; one is the “Agreement To Sell”, that is eventually followed by a “Sale Deed”.   Both these documents are critical in order to claim absolute ownership of the property [topic of another article from RealDocs coming shortly].

Typically, in both these documents, it is required to list out the agreed upon sale price for a particular property, by both parties [buyer(s) and seller(s)].  The below sections talk about what is required for these documents to stand up to legal scrutiny in a court of law.


Stamp duty is a tax that is levied on documents, and is one of the avenues through which states generate revenue.  Each State is governed by its own Stamp Act and therefore, the rate applicable for each type of document varies from state to state. It is critical that the right amount of Stamp Duty be paid, for 2 reasons:

  1. Penalty: If the sale price mentioned in the Sale Deed is less than the market value or the guidance value as fixed by the government for that property [or locality], the Sub-Registrar can refer it to the District Registrar for revaluation. If on revaluation the property is found to be under-valued, then deficit Stamp duty can be recovered with penalties, as defined by the District Registrar.
  2. Inadmissibility in Courts: If one enters into an “unregistered” Agreement to Sell with a buyer and that document does not have the required Stamp Duty, then such an Agreement cannot be legally enforced as it will not be admissible as evidence in courts. For it to be admissible at that point, one then has to pay 10x the applicable Stamp Duty for such a document, as penalty.


Registration refers to the process at the Sub Registrar’s office, where, upon signing of the document by both the Parties, it is brought before the Sub-Registrar to give its authentication. Authentication is accorded by assigning the document a unique number known as the “Document Registration Number”, taking the thumb impression and the photo of the parties, putting its seal and signature and finally scanning/copying.  This makes the document “official” and is then maintained as a public record. There is a certain amount of registration fee to be paid for each document, which completes the formalities required for registration.

Some frequently asked questions about registration:

Q:      Who can present document for Registration?

A:      The document is to be presented only by the persons who are party to the deed, or by a third person(s) but is authorized to represent the Parties.

Q:      Advantages of Registration:

A:      There are 2 main advantages:

  1. A registered document protects the parties from unnecessary claims and hassles in future. Once the document is registered, it is proof that the actual document is drawn between the parties.  This confers a secure and transparent way of establishing ownership over the property.
  2. The document becomes a public record. If in case the parties loose the original document, they can apply for the “Certified Copy [CC]” of the registered document. Hence the absence of originals does not nullify your rights acquired in terms of the document.

Q:      What documents require compulsory registration?

A:      Section 17 of the Indian Registration Act, 1908, requires certain documents such as Sale Deed, Release Deed, gift deed etc., by which the right of an immovable property is transferred from one person to another, is to be mandatorily registered. Further, if a loan is taken on a Property by way of a registered mortgage deed, upon payment of the loan amount, it becomes mandatory to obtain a discharge or NOC or a receipt from the financial institute [that extended the loan] and register the same.

Q:      What are the consequences of not registering a Sale Deed?

A:      Our prevailing laws such as Indian Registration Act, 1908 and Transfer of Property Act, 1882 do not recognise a “Sale Deed”, if it has not been registered.  This means the eventual ownership as specified in such an unregistered Sale Deed, will not be considered legal. The objectives here are very clear:

  1. To bring on public record the owner’s name, which shall prevent false claims and litigations over the property.
  2. To ensure the assured title of the property is transferred to the new owner, which bars the old owner from making any subsequent transfers.
  3. The registered documents are available for the public, which eases the compliance related to the property such as payment of taxes, cess, charges etc.

Q:      Does Registration differ from state to state?

A:      The short answer is YES.  To give you an example:

  1. In Karnataka, the prevailing real estate practice is that the builder enters into Agreement to Sell for selling the undivided share (UDS) in the land and Construction Agreement to build an apartment. Both the documents attracts stamp duty but are exempted from being registered compulsorily. However, the Sale Deed in terms of which the title passes from the builder to the buyer is a mandatory document for registration.
  2. In Maharashtra, the Agreement to Sell documents is mandatory for selling an apartment, and has to be registered as per the Maharashtra Ownership of Flat Act. Later on, the Sale Deed is executed in favour of the Apartment Association/Society, which in turn issues share certificate to the Agreement holders denoting their respective share in the Apartment complex.

We hope you find this blog useful. Watch this space for more insights on property related documentation.

RealDocs Team

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