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When a Person wants to transfer his or her property to any other person then there are certain guidelines provided by government which needs to be followed. It is called Property Transfer. When a person buys or sells the property it is important to know what are the charges applicable for transfer of property , types of property transfer, associated costs etc.
Let us understand the Transfer of Property in detail:
What is Property Transfer?
Section 5 of the Transfer of Property Act, 1882 defines the term transfer of property as an act by which a living person conveys property, in present or in future, to one or more other living persons, or to himself and other living persons. The phrase “living person” includes a company or association or body of individuals, whether incorporated or not but nothing in this section shall affect any law for the time being in force relating to or by the companies, associations or bodies of individuals.
The word property in the Act has been in one of the following senses:
- Tangible material things like house
- Rights which are exercised over material things like the right to sell or make a gift of things
- Rights which are not exercise over any material such as right to repayment of a debt.
In simple words when a person wants to transfer his property to any other person by following the guidelines provided by the government it is called Property Transfer.
Property Transfer Charges
Property Transfer charges are different from state to state. Different states or cities like tier 1, 2, 3 cities in India have different charges of buying property. Property transfer charges are mandatory for every citizen who wants to transfer his/her property. Charges of Transfer of property Act 1882 define Real Estate as broadly classified in to 2 categories Movable Property and Immovable Property. The location of the property affects the price of the property, and when you select the locations which are best for living and work the absolutely it will be directly affected by the stamp duty and registration charges.
Stamp Duty and Registration Charges in India
After the purchase of the property two major costs will be added to the expenses one is stamp duty and the other one is one time registration charges. Under Section 3 of the Indian Stamp Duty Act, 1899.
Stamp Duty and Registration Charges in Different Cities across India
Given below are the stamp duty and registration charges in different cities across India
City | Stamp Duty Charges | Registration Charges |
Bangalore | 2% to 5% | 1% of the property value |
Delhi | 4% to 6% | 1% of the deal value |
Mumbai | 3% to 6% | 1% of the property value |
Chennai | 1% to 7% | 1% to 4% of the property value |
Kolkata | 5% to 7% | 1% of the total property value |
Gujarat | 4.90% | 1% of the total property value |
Kerala | 8% | 1% of the total property value |
Maharashtra | 5% | 1% of the total property value |
Tamil Nadu | 7% | 1% of the total property value |
Uttar Pradesh | 7% | 1% of the total property value |
West Bengal | 7% to 8% | 1% of the total property value |
Rajasthan | 5% to 6% | 1% of the total property value |
Telangana | 5% | 1% of the total property value |
Uttarakhand | 5% | 1% of the total property value |
Factors that effect the Stamp Duty Charges
Various factors effect Stamp Duty Charges and they differ from state to state, person to person, gender to gender etc. in a few states where the stamp duty rate is low for females such as Assam, Bihar, Haryana, Punjab and many more.
- Gender of the owner
The charges of the stamp duty depend upon the gender criteria of the person. Just like a senior citizen if the property is registered in the name of a woman and she wishes to transfer her property to anyone so she will get some amount of concession. This facility does not apply to all Indian citizens. States like Maharashtra, Bihar, Jharkhand, and Kerala the charges are the same for men and women.
- Property Age
Another criteria for stamp duty charges is the age of the property. If the buyer is purchasing old property so there are chances of less stamp duty and vice versa.
- Property Location
The location of the property plays an important role in the charge of stamp duty. If you are a citizen of an urban area like Mumbai, Kolkata, or Bangalore, the stamp duty is higher than compared to rural areas. In urban areas like Mumbai, Kolkata, and Bangalore, the stamp duty – a tax paid on property transactions – tends to be higher than in rural regions. This is due to the city like Mumbai have expensive house values and demand in cities.
But when you looking for the best return on your investments, then you must ignore the stamp duty charges and go for the Smart Cities to invest your precious money.
4. Property Types
Stamp duty depends on which type of property a person is planning to buy. Whether it is a flat, land, villa, and independent house, Charges differs for each property.
5. Property Usage
It depends upon the usage of the property. Either is purchased for residential purposes or commercial purposes. Charges are always higher for commercial properties as compared to residential properties.
6. Project amenities
If you purchase a property and they offer you exclusive amenities like Club house, transport facility, swimming pool, gym, community hall, garden, etc. stamp duty charges are high for this type of property.
Procedure for Transfer of Property
The procedure for Transfer of Property involves a series of steps and legal process to ensure the transfer of ownership takes through a proper documentation and lawful process. Exact process differs depending on the jurisdiction and circumstances. Here are certain typical steps involved in property transfer:
- Sale Deed
Whenever a person is transferring his/her property to one or more persons in the present or future is known as property transfer. Sale deed refers to a legal document that outlines the terms and conditions of the sale. It is executed by the seller and buyer for the transfer of ownership of the property. The sale/purchase of the property is not legally completed until the sale deed is signed by the buyer and the seller and is registered. Sale deed includes information such as Name and Address of the executing parties, Description of the property, Sale consideration, Indemnity, registration details.
- Gift Deed
Whenever a person voluntarily gifts his/her property to any person then its called a gift deed. This type of transfer generally involves less disputes. gift deed allows the property owner to gift the property to anyone and avoids any future dispute arising out of succession or inheritance claims. A registered gift deed is also evidence in itself and unlike in the case of a will, the transfer of property is instant and you will not be required to go to the court of law for execution of gift deed and hence, deed of gift also saves time.
- Relinquishment Deed
It happens only when the owner of the property expires and the co-owner wants to transfer his owner property to another co-owner. This type of deed must be registered in court for legal process. They are executed when one party decides to relinquish or give up their share of the property for a number of reasons.
4. Will deed
If the owner of the property makes a will deed that, after the death of the owner to whom the property will be distributed. The owner needs to mention all the details of the heirs. To prevent future legal problems between the heirs, it includes rules for the division and disposal of property and assets. However, the testator has the right to modify or revoke it at any moment
- Settlement deed
It is a legal contract between family members only, specifying that if in the future there is any disagreement happen between them then they all should follow the same terms and conditions mentioned in the agreement. It includes only close family member who is a part of the property distribution.
