Some important instruments related to immovable property, such as agreement to sell, sale deed, lease deed, gift deed, partition deed, to name a few, should be compulsorily stamped. In transactions of immovable property, the amount of stamp duty payable is calculated on the market value of the
property (as per the prevalent circle rates) or on the basis of the consideration amount of the property set out in the document, whichever amount is higher.
Circle rates lay down the minimum rates for valuation of land and immovable property. One of the primary reasons behind state governments introducing and periodically revising circle rates is to curb under-valuation of transactions relating to immovable property. Undervaluation of property prices in transactions of immovable property is a significant factor in circulation of black money in the economy. Last year, the Delhi government had revised circle rates under the provisions of the Indian Stamp Act, 1899, as applicable to Delhi and the Delhi Stamp (Prevention of Under-valuation of Instruments) Rules, 2007 (Delhi Stamp Rules).
As per the Delhi Stamp Rules, in an instrument relating to immovable properties which is chargeable with ad valorem stamp duty, one is required to furnish certain essential particulars about the property in question, in addition to the market value of the property. These particulars are taken into consideration by the registering authorities and help them assess the stamp duty chargeable on an instrument of an immovable property. If the instrument in question relates to different kinds of properties or if it covers more than one property located at different places, the information required and the value of each such property has to be specified separately.
In addition to the details in the accompanying table, the party which presents the instrument relating to immovable property (which is chargeable to ad valorem stamp duty) is also required to submit a statement in the prescribed form. Under the Delhi Stamp Rules, the registering officer may also call for any additional information on the property transaction from the concerned parties.
The consequences of non-payment and inadequate payment of stamp duty are harsh and can lead to impounding of the document and attract a hefty penalty of about ten times the applicable stamp duty. Adequate stamping, wherever required, also grants legal documents the status of being admissible as evidence in courts. Thus, adequate and timely payment of stamp duty helps protect the rights and interests of the parties in the transaction. The Delhi Stamp Rules go a long way towards curbing circulation of black money, increasing transparency in transactions of immovable property and adding to the revenue of the state.
The author is a senior partner, ZEUS Law Associates, a corporate commercial law firm. One of its areas of specialisation is real estate transactional/litigation work