How to register a property in India?

Purchasing a property in India involves fulfilling several legal obligations. One of them is the registration of property in the government records for establishing the rightful ownership of the new buyer and safeguarding one’s property rights. Prospective property buyers and sellers must understand the property registration process to ensure a hassle-free property transaction and avoid unnecessary expenses through penalties. Moreover, several state governments have simplified the process of property registration by providing an online portal for the citizens under the centre’s ‘Digital India’ initiative. Thus, one need not make multiple visits to various government offices and wait in long queues to get the property registered. In this guide, we discuss the process of property registration in India.

What is property registration?

Property registration is the process of verifying and registering property documents during sale or transfer at the government’s registrar’s office. All properties, including residential or commercial, gifted property, etc., must be registered. The government levies a tax for the registration of property called stamp duty, which is a specified percentage of the property’s market value. In addition, a registration fee, a specified percentage of property’s market value, must also be paid by the buyer.

Is property registration mandatory?

Property registry is that legal process under which documents related to property are registered with the local authorities as per Section 17 of the Registration Act, 1908. In India, it is mandatory to complete property registration. However, if the property value is below Rs 100, registration is not required.

Law applicable on property registration

There are two main laws governing property registration in India. The first is the Registration Act of 1908, which mandates that any sale of immovable property (such as land or buildings) exceeding Rs 100 should be registered. It defines the procedures and authorities responsible for the registration of property documents. The second law is the Indian Stamp Act of 1889, which laws down rules about the payment of stamp duty on property documents to be registered.

Click to read in detail about the property registration in India: Rules, documents, charges

How to register a property in India?

#1. Verify ownership of the property

The buyer should carefully check the documents to ascertain the property ownership. Through these documents, they should verify how the property was transferred from one owner to another. This helps prevent potential legal issues later.

#2. Ensure clearance of dues

Before proceeding with the property registration, make sure to check if all the dues, such as electricity bills, water bills, property taxes, etc., have been cleared by the existing owner. This should be done at the time of finalising the property purchase.

#3. Obtain encumbrance certificate

Encumbrance certificate or EC is a legal document issued by the relevant government authority, which verifies the property’s ownership and mentions if the property has any legal or financial liabilities or mortgage associated with it. Obtaining the EC at the time of property purchase protects the buyer from inheriting such liabilities from the previous owner, thus preventing legal problems.

#4. Get the property deed prepared

A property deed is a legal document executed for the transfer of ownership from one person to another. It could be a sale deed, a lease deed or a gift deed, depending on the type of transaction undertaken. The deed contains all the details about the property and the terms and conditions of the agreement.

#5. Get the required documents for property registration

During the property registration process, one is required to have the following documents:

• Photographs and identity proofs: These include passport-size photographs and identity proof documents of both parties – buyer and seller. For example, an Aadhaar card or PAN card.
• Property documents: One should have a copy of the latest property register card with property details. A copy of the verified sale deed for the property is also required.
• Construction completion certificate: This certificate is a legal document certifying that a new building has been constructed and completed per the safety norms and regulations of the Buildings Act 2004.
• Tax documents: Obtain the receipt of the latest municipal tax bill paid for the property.
• No Objection Certificate (NOC): An NOC is a document stating there are no pending dues or objections related to the property. It is issued by relevant authorities such as housing society, land development authority, municipal authority, etc.
• Power of Attorney (POA): A Power of Attorney (POA) for property sale refers to a legal document that authorises someone the authority to sell a property on behalf of the owner.
• Stamp Duty and fee receipts: After the payment of stamp duty and registration fees, the payment receipts are generated.

#6. Complete the property registration

Visit the sub-registrar’s office for property registration offline:

One should note that the buyer and seller or their authorised representatives must be physically present during the property registration process. After gathering all the required documents, one must approach the local sub registrar’s office, the government authority responsible for registering properties within its jurisdiction. One can visit the official portal of the revenue department to find the sub-registrar’s office. The government office is usually open during business hours on weekdays.

Online property registration:

Most states in India provide the online facility of property registration through a dedicated portal. The steps may vary, depending on the state’s website. However, here is a basic step-by-step process for online property registration:

• Find the official website of the state’s registration department, if available. Check if the online property registration service is available for the area where the property is situated.
• Calculate the applicable stamp duty and registration fees for the property transaction.
• Proceed to pay the stamp duty and fees online through digital modes such as net banking, debit card, credit card, etc. A payment receipt will be generated. Keep the receipt for future reference.
• Visit the sub-registrar’s office with the payment receipts and complete the remaining registration process.

One should note that only a certain part of the property registration process can be completed online even if you state provide online property registration facilities. One has to schedule appointment and visit the sub-registrar office for the final signing and bio-metric verification. Some online services provided by these portals include:

• Check the circle rate in the area to decide the total value of the property
• Calculate stamp duty and registration charge amount
• Pay stamp duty and registration charge

#7. Execute the sale deed

At the sub registrar’s office, the sale deed should be executed by the buyer and seller in the presence of two witnesses. The sale deed is a key legal document containing the complete details of the property, including its boundaries, dimensions and any encumbrances associated with it. One should check the document thoroughly before signing it. One can take the help of a legal professional to understand the processes.

#8. Pay stamp duty and registration fee

The buyer should pay the stamp duty during the registration or the execution of the property documents. In some states, stamp duty should be paid before the documentation process while it should be paid within a specified period after registration in other states. In most cases, it is the property buyer who pays the stamp duty. Both the seller and the buyer must share the costs of stamp duty for property exchange cases. The stamp duty rates vary from state to state. Moreover, female property buyers are given rebates on stamp duty in some states.

Similarly, property registration charges may range from 1% to 3% of the total property value. There is a maximum limit of Rs 30,000, even if the property value is high. If the property value exceeds Rs. 50 lakh, one must pay 1% Tax Deducted at Source (TDS) on the value.

The authorities will verify all the submitted documents. After the property registration is completed, it will take around two weeks or 15 days for the property documents to get registered. One has to visit the sub-registrar’s office to get the documents back.

Click here to read about stamp duty payment process for home buyers

Online property registration portal in different states

What is the National Generic Document Registration System for Property Registration (NGDRS)?

With the aim to implement a uniform process for registration of documents, the government’s Department of Land Resources introduced the ‘National Generic Document Registration System (NGDRS), a software under the broad aegis of ‘Computerisation of Registration’ under the Digital India Land Records Modernization Programme (DILRMP). The NGDRS has been developed as a common, generic and configurable application to support the registration departments in the country. The application is designed to be used by the sub-registrar offices, citizens and other users from the state registration departments. The system enables states to create state-specific NGDRS and configure the software as per the state-specific requirements.

Besides enabling property and document registration, the portal allows citizens to go for land purchase and property registration online. It enables them to check circle rate for land, calculate property valuation based on prevailing rates and understand the type of land available for sale.

Valuations for property registration

Property valuation refers to the process of calculating the actual price of a property such a land parcel or a building.

There are several factors considered during valuation of a property. These include the property’s location, amenities, property type, size and other physical factors, market trends, etc.

Market value vs circle rate

The property registration charges is typically paid on the market value of the property, the price the buyer pays to purchase the property. However, there is a minimum value of the property, as determined by the state government, below which the registration cannot be done, which is known as the circle rate or ready reconker rate. In case the market value of a property is more than the circle rate, the registration is done based on the higher value, that is, the market value. On the other hand, if the market value is lower than the circle rate, the registration should be done based on the higher value, that is, the circle rate in this case. However, one should that one can still register the property based on market value (in this case lower than the circle rate) but the difference between the market value and circle rate will be taxabale as it will be considered as income.

Bank valuation

Property registrations can also be done based on bank valuation of a property. This refers to the assessment of the property’s value by lending institutions for assessing loan eligibility and sanctioning loans. However, banks usually ask borrowers to go for property registration at full property value or a higher value.

Property value mentioned in construction agreement

Buyers can also register a property at the value of the property specified in the construction agreement with the property developer. This will enable them in reducing the final stamp duty charges.

Factors that impact property registration charges

• Property type: The stamp duty and property registration charges differ for residential and commercial properties. Typically, the rate is higher for commercial properties.
• Property age: The building’s age impacts the stamp duty and registration charges. Generally, one has to pay more for new properties. This is usually because the value of older properties depreciates with time.
• Amenities: The presence of amenities impacts the registration charges. The charges are higher if the property has more amenities such as gymnasium, clubhouse, etc.
• Location: The charges are higher if the property is located in a posh neighbourhood or close to an airport, metro, etc. Similarly, the charges are higher for properties in metro cities and developed towns compared to developing areas.
• Transfer type: The property registration charges are lower for gift deed or if the title was transferred to a family member. There is a standard regsistration fee determined by the government, if the property was purchased from a non-family member.
• Gender: Many states offer rebate on stamp duty if the property is registered in the name of a woman.

Property registration fee in different states

New regulations for property registration

The government came up with new regulations for property registration in 2020. According to the new rules:

• The copies of all property documents are available on the same day. This has been made possible due to digitisation.
• An unregistered property cannot be produced as a valid evidence in a court of law as it has no legal validity.
• One cannot claim compensation with a non-registered government-acquired property according to Income Tax laws.

Land registration process in India

• Determine the value of the property based on the circle rates in the area. You can visit the official government portal of the relevant state to check the details.
• Get a non-judicial stamp paper of the required value based on the property value. It can be purchased online or through a stamp vendor.
• Get the property deed (sale deed, gift deed, etc.) printed on the stamp paper with the complete details of the transaction.
• The buyer and seller must visit the sub-registrar’s office along with two witnesses with all the required documents.
• Complete the payment of the stamp duty and registration charges.

Housing.com News Viewpoint

Property registration is a legal obligation all property buyers must fulfil. If one fails to register the property, the government may impose penalties or take legal action. Similarly, there would be penalties or legal consequences if one pays less stamp duty. Hence, it is essential to stay updated about the latest stamp duty in different states. Most states have set up portals to facilitate online property registrations and other services such as latest circle rates, stamp duty calculator, etc. One can approach a legal professional to get guidance with the property registration process and reduce hassles.

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