An Article Regarding "STAMP DUTY VALUATION"

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The terminology 'undervaluation' is frequently used in matters of transfer of property, which has a direct bearing on payment of stamp duty and registration charges payable to Government. Before turning upon the subject 'under-valuation', it is necessary to understand the constitutional provisions relating to stamp duty. Articles 246, 265, 268, 269(1) of the Constitution of India are relevant here. Article 246 refers to the powers of Parliament and State Legislature to make laws. The Constitution of India has union list, state list, and concurrent list. TheParliament has powers to make laws in respect of matters mentioned in the union list and state legislatures have powers to make laws in respect of matters mentioned in the state list and both have powers to make laws in respects of matters mentioned in the concurrent list.

For day-to-day functioning and to meet administrative expenses and also for undertaking developmental works, everyGovernment whether in the Central or States requires revenue which are earned from different sources. Levy of tax is one such source of income to the Government. Article 265 makes it

very clear that no tax shall be levied

or collected except under an authority of law. Stamp duty registration charges are the major sources of revenue to the State Governments. In Karnataka, the department of registration and stamp duty is ranked among the top five revenue earning departments of the State.

The stamp duty and registration charges are payable on ad-volerem basis, that is based on the value of property. No maximum limit is prescribed in respect of stamp duty and registration charges payable on transfer of property. The stamp duty and registration charges go up with the increase in the value of sale consideration paid for the property i.e. higher the sale consideration, the greater the stamp duty and registration charges. These charges are normally borne by the purchaser of the property unless there is a contract between the parties to the contrary effect. Apart from payment of sale consideration, stamp duty and registration charges, the purchaser has to incur expenditure to get revenue records mutated in his/her name and for transfer of power and water connections to his/her name. All these expenses put together would be around 12% of sale consideration.

To save some money from out of this expenditure, parties to a sale transaction by mutual consent mention the value of the property in the conveyance deed at a much lower figure than its actual market value and thereby pay less stamp duty and registration charges while at the same time, the purchaser makes payment of sale consideration as agreed upon to the vendor. This process of declaring the value of a property in the conveyance deed at a figure lesser than the actual sale consideration agreed upon for purposes of registration is generally known as undervaluation of the property. This modus operandi has two adverse effect on the society. Firstly, there is loss of revenue to the Government and secondly, circulation of unaccounted money III the market goes up. The Karnataka Stamp Act 1957 has certain sections dealing with undervaluation of property. Section 45-A

Inserted the Karnataka Stamp Act 1957, during 1975 and 45-B inserted during 1991 deal with the subject. Section 45-A deals with the procedure to be adopted where the properties are undervalued in a sale transaction.

The parties producing documents for registration have to file the market value of property calculated in the prescribed form No.1. If registering officer has reasons to believe that the market value of the property shown in the document produced for registration is not the actual value of the property in the locality, he may arrive at the market value of such property and inform the parties to pay the stamp duty and registration charges according to the market value arrived by him. For arriving at the marketvalue, the registering officer will use the guidelines value published by the committee constituted for estimation of market value under Sec.45-B. The values published by the committee are the guidelines value for registering offices to determine the market value. They are the average value of the property in a particular locality. If the sale consideration of a property shown in the sale deed is lower than the guidelines value prescribed for that area, then the stamp duty & registration charges are payable on the basis of the guidelines value. If the market value of this property is more than the guidelines value, the stamp duty payable is as per the market value. The registering authority informs the market value as arrived by him in form I-A to the parties. This gives options to the parties to contest the valuation done by the registering authority, or to agree or to withdraw the document from registration.

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Article Regarding "REGISTRATION OF PROPERTY"

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All documents do not require registration compulsorily. The Transfer of Property Act, 1882 and the Indian Registration Act, 1908 have made registration of certain documents compulsory while in respect of certain other documents it is optional. According to Section 17 of the Indian Registration Act, 1908 registration of documents is compulsory if they relate to an immovable property. Similarly, Section 54 of Transfer of Property Act 1882, stipulates that sale of immovable property the value of which is one hundred rupees or more should be registered. Since no immovable property is available for rupees one hundred or less than rupees one hundred, implicitly all sale deeds of immovable property need compulsory registration.

Most of the instruments:

dealing with the immovable property for creating, declaring, assigning, limiting or extinguishing any right, title or interest in the property require compulsory registration, as enumerated under the Indian Registration Act, 1908. For executing an instrument, the first and the foremost aspect to be considered is the nature of the right intended to be transferred. If the document falls within the category of the documents which warrants compulsory registration, any avoidance of registration of such document would invalidate the compulsory registration, any avoidance of registration of such document would invalidate the document itself. For documents which require mandatory registration certain procedures are prescribed.

Time limit for registration:

U n d e r Section 23 of the Registration Act, subject to certain exceptions, any document other than a Will has to be presented for registration within four months from the date of its execution. Execution means signing of the document. It is not uncommon that the date of execution and the date of registration may differ. For the non-testamentary documents such as Sale Deed, Gift Deed, Mortgage Deed, etc, the time limit within which the document has to be registered is four months from the date of execution. Decrees drawn in terms of Compromise Petition wherein shares of the parties are allotted by metes and bounds require registration.

Even for registration of the court decree, four months time limit is stipulated under the Act. If the document is executed by all or any of the parties residing abroad, the same can be accepted for registration within four months from the date of receipt of the document in India. In case of doubt as to the validity of registration, the document may be re-registered within four months from the date when it is noticed that the registration is invalid or of doubtful validity. Where a document is executed by several persons at different times, it should be presented within four months from the date of the latest execution for registration. If a document is not presented for registration within the prescribed period of four months and the delay in presentation or the document does not exceed a further period of four months, then theparties can apply to the Registrar for registration of the document who may direct, upon payment of fine not exceeding ten times the actual registration fees, for registration of such a document.

A document relating to an immovable property can be executed out of India and later it can be presented for registration in India. As per section 26 of the Registration Act, 1908, if a document purporting to have been executed by all or any of the parties out of India is presented within the prescribed period of time for registration, the Registering Officer may, on payment of proper registration fee accept such document for registration if he is satisfied that the instrument was executed out of India and the instrument has been presented for registration within four months after its arrival in India.

Fees of Registration:

Fees charged for the registration or searching the register are prescribed by State Governments through Notifications.

Testamentary instrument:

In case of Testamentary instrument, that is, Will, registration is optional and time limit is not prescribed. It can be registered any time before the death of the Testator. However, it is advisable to register the same as soon as possible in order to avoid disputes about the genuineness of its execution. In case of registration of Will, the same may be presented by the Testator during his life time and after his death, by the beneficiary or the administrator, for registration.

A Will may be deposited with the Sub- Registrar in a sealed cover and such deposit may be done through an agent. Afterthe death of the Testator, the sealed envelope will be opened and the contents recorded in the relevant register maintained in the Sub-Registrar's Office. The Original copy of the 'Will' will be in the custody of the Sub-Registrar.

Jurisdictional S u b- Registrar Offices:

Generally documents have to be presented for registration only at the Sub-Registrar's office within whose juri diction the immo able property is situated. However, in certain exceptional cases, documents may be presented for registration with the Registrar who has been conferred with the power to register the documents. In fact, Sub-Registrars have been vested with the special power to register the document at the residence or office of the executant or to accept deposit of Will.

Presentation of the document:

Documents which require mandatory registration have to be presented in the concerned Sub- Registrar Office for registration by the executant or person claiming under the Decree. However, in certain cases, the representatives of the Executant, duly authorized under Power of Attorney, can also execute the same on behalf of the Executant. A power of Attorney holder can execute the document, epresenting the Principal only if an authority has been vested in him under Power of Attorney, which is authenticated by the Registering authority within whose jurisdiction the Principal resides. If the Principal does not reside in India, then the Power of Attorney should be executed before and authenticated by a Notary Public or any Court, Judge, Magistrate, Indian Consul or Vice-Consul or the Representative of Central Government in that country and the same IS required to be presented with the concerned registrar in India with in a period of three months of its receipt in India. When a document has been executed by more than one executant and after execution of the same, one of the executants refrain from attending the concerned Sub- Registrar's Office for registration, then the remaining executants can compel attendance of the executant reluctant to be present before the registering authority through the process of law.

Enquiry by the Registering authority:

The Registering Officer is empowered under sec. 34 of the Registration Act to enquire whether or not the person is the same by whom it purports to have been executed such a document. He may insist on production of proof for his identity and in case any person is appearing as a representative or agent, the Registrar may ask for relevant documents to show that the agent or representative has the right to appear on behalf of his principal.

Effect of non-registration:

What would be the repercussion if a document which requires compulsory registration is not registered? Section 49 of Indian Registration Act deals with this situation. It states clearly that such un-registered documents do not convey to the transferee a legally valid title and such documents are not admitted as evidence for any transaction affecting the property referred to in the document. However, there is an exception provided in the Act. The unregistered documents may be admitted as evidence in a suit for specific performance under Specific Relief Act or in any other related transaction, not required to be effected under a registered instrument. 



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Artical Regarding "IMPROVE INFRASTRUCTURE"

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Still a lot remains to be done in Bangalore, the infrastructural facilities such as good motorable roads, medical facilities to the poor, public transport, housing for poor and the needy, potable water for everybody, good sanitation facilities, uninterrupted electricity supply, etc., The problems concerning potable water anduninterrupted electricity supply and medical care for the poor inthe State are gigantic and require huge sums of money and longdrawn up plans. The business community and the people at large in the State are hopefully and patiently waiting for the speedier solution to these civic problems.

Though developmental activities are part of progression of the State which requires the participation of the multinational companies, to a certain extent, it would be proper and fair for the Government to first develop the available infrastructure to the world class standard and thereupon only invite the multinational companies to participate in the developmental activities of the State, though it is not an easy task. Any deviation from this approach would not only add to the sufferings of the business community and the people who have already established their business units in the State, but could invite the wrath of the multinational companies which in turn may bring down the image of the State in the world market.Therefore, the State Government may take urgent steps to augment the available infrastructural facilities particularly, road connectivity, water and electricity supply in the State so that the people can have the pleasure of good motorable roads, minimum power shut down and regular water supply in the State. 

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