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Sunday 14 December 2014

STAMP DUTY VALUATION

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The terminology 'under-valuation' is usually utilized in matters of transfer of property,that encompasses a direct touching on payment of stamp duty and registration charges owed to Government. Before turning upon the topic 'under-valuation', it's necessary to know the constitutional provisions regarding 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 legislative assembly to form laws. The Constitution of India has Union list, State list, and co-occurring list. The Parliament has powers to form laws in respect of matters mentioned within the union list and state legislatures have powers to form laws in respect of matters mentioned within the state list and each have powers to form laws in respects of matters mentioned within the co-occurring list. 


For regular functioning and to satisfy body expenses and conjointly for enterprise biological process works, each Government whether or not within the Centre or State needs revenue that is attained from completely different sources. Levy of tax is one such supply of financial gain to the govt... Article 265 makes it terribly clear that no tax shall be levied or collected except underneath associate degree authority of law. 

Stamp duty registration charges are the foremost sources of revenue to the State Governments. In state, the department of registration and revenue enhancement is hierarchical among the highest 5 revenue earning departments of the State. 

The stamp duty and registration charges are owed on ad valorem basis, that's supported the worth of property. No most limits are prescribed in respect of revenue enhancement and registration charges owed on transfer of property. The revenue enhancement and registration charges go up with the rise within the worth of sale thought purchased the property i.e. higher the sale thought, larger the revenue enhancement and registration charges. These charges are ordinarily borne by the customer of the property unless there's a contract between the parties to the contrary result. Except payment of sale thought, revenue enhancement and registration charges, the customer should incur expenditure to urge revenue records mutated in his/her name and for transfer of power and water connections to his/her name. 

To save some cash from out of this expenditure, parties to a purchase group action by mutual consent mention the worth of the property within the conveyance deed at a way lower figure than its actual value and thereby pay less revenue enhancement and registration charges whereas at a similar time, the customer makes payment of sale thought as arranged to the seller. This method of declaring the worth of a property within the conveyance deed at a figure lesser than the particular sale thought arranged for functions of registration is usually referred to as under-valuation of the property. This procedure has 2 adverse effects on the society. Firstly, there's loss of revenue to the govt. and second, circulation of unaccounted cash within the market goes up. The state statute 1957 has bound sections handling under-valuation of property. Section 45A inserted within the state statute 1957, throughout 1975 and 45-B inserted throughout 1991 traumatize the topic. Section 45-A deals with the procedure to be adopted wherever the properties area unit undervalued in an exceedingly sale group action.

The parties manufacturing documents for registration have to be compelled to file the value of property calculated within the prescribed type No.1. If registering officer has reasons to believe that the market worth of the property shown within the document created for registration isn't the particular value of the property within the neighborhood, he might reach the value of such property and inform the parties to pay the stamp duty and registration charges consistent with the value got hold of by him. For inbound at the value, the registering officer can use the rules worth printed by the committee implanted for estimation of value underneath Sec.45-B. The worth’s printed by the committee area unit the rules value for registering offices to work out the value. They’re the typical worth of the property in an exceedingly specific neighborhood. If the sale thought of a property shown within the sale deed is not up to the rules worth pre- scribed for that space, then the revenue enhancement & registration charges are owed on the idea of the guide- lines worth. If the market price of this property is over the rules value, the revenue enhancement owed is as per the value.

The registering authority informs the value as got hold of by him in type 1A to the parties. This offers choices to the parties to contest the valuation done by the registering authority, or to agree or to withdraw the document from registration. 


The registering officer might proceed with the registration, if the party pays the stamp duty and registration charges as got hold of by him. If the parties don't accept as true with registering officer and need to contest a similar, the registering officer shall keep the method of registration unfinished and refer the touch the Deputy Commissioner together with a duplicate of the document bestowed for registration for determination of the right value of property and revenue enhancement owed on that.The Deputy Commissioner when hearing the objections of the parties throughout the course of enquiry determines the right revenue enhancement owed and therefore the parties shal1 pay revenue enhancement and registration charges consequently. 

Many times the parties pay revenue enhancement as determined by the registering officer and obtain the documents registered. Despite this typically the seller and/or the customer receive notice requiring them to pay stamp duty at an extra increased figure. this is often as a result of the Deputy Commissioner has powers to initiate suo moto action with none relevancy him for examination of the registered documents to establish whether or not the worth of the property has been properly shown within the (prevention of under-valuation of instruments) Rules 1977, provides tips to Deputy Commissioners and Divisional Commissioners to reach the right value, the procedure to be adopted to work out the value and therefore the procedure for conducting the enquiry, etc. the principles give definite parameters to reach the value, relying upon the character of property like, land, house sites, buildings, and alternative properties. the rules worth are general in nature and are for steerage solely.


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