How is stamp duty on property calculated? According to the Indian Stamp Act, 1899, stamp duty is charged on the higher amount of the two – purchase price of a house or the cost calculated on the basis of a circle rate (market rate fixed by the government). Surprisingly, residents of a project in Indirapuram allege that the Noida Revenue Department has threatened that their apartments will be sealed. The charge against them is that they have evaded stamp duty ranging from R2 lakh to R3 lakh, which had been calculated on the basis of the property rates mentioned by the project developer in his advertising brochure.
Dilip Sharma, a resident of a group housing society, Jyoti Super Gardenia, Indirapuram, bought a 1391-sq ft flat for R19,32,175 in 2008. As the price was higher than what was calculated on the basis of the circle rate then, that is, R18,24,000, Sharma paid R1,93,300 as stamp duty, at 10% of the purchase price. To his shock, however, he received a notice from the sub-registrar alleging evasion of stamp duty.
“The then sub-registrar Mukesh Kumar Sagar checked the developer’s website and factored in the rates of the apartment mentioned in the brochure, which was much higher than the actual purchase cost. Rates in the brochure came to as much as R37,27,880 while the developer’s actual selling price was R19,32,175. Even car parking and maintenance costs were added to the cost of the flat and a case of around R2,31,330 of stamp evasion registered against us,” says Sharma.
The district collector, following complaints by the residents, ordered the sub-divisional magistrate, Dadri, to inquire into the issue. The SDM in his report then said that rates in brochures could not be equated with market rates for collection of stamp duty. “In spite of the order, first the district collector and then the commissioner, Meerut division, dismissed our appeal and ordered that stamp duty be paid on the basis of the developer’s brochure rate. Some of us have approached the Allahabad High Court and got an interim stay on this order,” says Prem Adnani, one of the complainants.
The sub-registrar, in a counter affidavit in the High Court, has justified the action against the residents, saying, “It was alleged that the rate of R2680 per sq ft was found published in the brochure of the company issued to the public in general as such the same rate along with the price paid for car parking and maintenance charges were computed and reported as true market value of the property. The stamp case was rightly instituted in the interest of government revenue under the provisions of section 33/47A of the Indian Stamp Act.”
Property registration experts say this is a one-of-a-kind case. When contacted, Alok Kumar, inspector general of registration, Uttar Pradesh, says, “I agree that it’s the purchase cost and not the brochure which is a basis for stamp duty calculation, but if a house is categorised as an ultra luxury unit, the revenue department can depute a surveyor to assess its market price independently and charge stamp duty on it. If the residents find that they have been treated unfairly, they can appeal in the higher legal forum for relief.”
SP Singh, a lawyer who deals with registration cases in Noida, says, “These flats which cost around R20 lakh are not ultra-luxurious at all. They are meant for the middle-class buyers. There are 84 flats in Jyoti Super Gardenia and only 29 owners have been victimised and asked to pay stamp duty on the basis of brochure rate while the rest of the residents have got their registration done on the purchase cost. There isn’t a single example in anywhere in Uttar Pradesh where stamp duty has been calculated on the basis of the brochure rate.”
Vivek Tyagi, another complainant, who is also the secretary of the residents’ welfare association of Jyoti Super Gardenia, says, “It’s surprising that the IG (revenue) advises the residents to get justice from the higher courts. Isn’t it harassment? Some of the residents who don’t want to get into litigation have started acceding to the demand.”