The home-buying process can seem like a cakewalk if you understand what it entails. Here are a few terms that you need to be aware of
The home-buying process can seem like a cakewalk if you understand what it entails. Here are a few terms that you need to be aware of
Market value, stamp duty, registration
Market Value means the price at which a property could be bought in the open market on the date of execution of such an instrument. The Stamp Duty is payable on the agreement value of the property or the market value, whichever is higher.
Stamp Duty is a tax, similar to sales tax and income tax collected by the government, and must be paid in full and on time. A stamp duty paid instrument/document is considered a proper and legal instrument/document.
The liability of paying stamp duty is that of the buyer unless there is an agreement to the contrary. Section 30 of Bombay Stamp Act, 1958 states the liability for payment of stamp duty.
Registration
Formalities: Formalities and forms may vary from State to State depending on where the property is situated.
Every State has its set forms under the Registration Rules that are required to be filled and filed along with and at the time of Registration of Sale Deed/Transfer Deed.
Time limit for registration: The property agreement should be registered with the Sub-registrar of assurances under the provisions of the Indian Registration Act within four months of the date of its execution.
Taxation issues
From the point of view of taxation no special formalities are required for completing while buying the property. However, proper Agreement to Sale etc, must be done and the ownership and the title should be verified to ensure that one does not have a problem at a later stage in respect of such property.
PAN
Under the provisions of the Income Tax Act and Rules for a transaction of sale, it is now compulsory for the purchaser and seller to give their Permanent Account Number and in the event of either the Seller and/ or the Purchaser would be required to fill Form 60 of the Income-Tax Rules.
Capital gains tax
For the purpose of Real Estate, the Long-term Capital gain would be only if you hold the property for more than three years, then it is subjected to tax @ 20 per cent only.
In case you sell the property in less than three years time then it would become short-term Capital Gain and the same is required to be taxed at the prevailing tax schedule of the rate applicable to the assessee depending on his other incomes.
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