BUYERS'S GUIDE

We would like to help you in every way we can. Here is a guide to buy your dream property.

Click on Questions to view the answer.

What is the extent of application of the Bombay Stamp Act, 1958 as amended from time to time?

The Act applies to the whole of the State of Maharashtra.

What is an "instrument" under the Act?

An "instrument" includes every document by which any right or liability is or purports to be created, transferred, limited, extended, extinguished or recorded, but does not include a Bill of Exchange, cheque, Promissory Note, Bill of Lading, Letter of Credit, Policy of Insurance, Transfer of Share, debenture, proxy and receipt.

What is market value?

Market value in relation to any property which is the subject matter of an instrument means the price which such property would have fetched if sold in the open market on the date of execution of such instrument or the consideration mentioned in the instrument, whichever is higher. The price which such property would have fetched, if sold in the open market, is determined on the basis of the Ready Reckoner issued each year. Depreciation in stamp duty is available for old buildings and building without lift.

When is stamp duty payable on an instrument in Maharashtra?

All instruments are liable to be stamped before or at the time of execution of instrument or immediately thereafter on the next working day following the date of execution, when executed in the State of Maharashtra. Any instrument executed outside the state is liable to duty only on receipt of such instrument in the state, provided it relates to a property situated in the state, or a matter or thing to be done in the state. Stamp duty is not levied on a transaction, but on an instrument.

What is the rate at which stamp duty is payable?

Stamp duty is payable at the rate mentioned in the Bombay Stamp Act, 1958 and as amended from time to time.

Which documents are required to be compulsorily registered?

Documents listed in Section 17 of the Indian Registration Act, 1908 are to be registered compulsorily. Registration of documents listed in Section 18 of the Indian Registration Act, 1908 is optional. An Agreement of Tenancy or for leave and licence is required to be compulsorily registered under the Maharashtra Rent Control Act, 1999.

Is there a time limit within which documents should be registered?

Yes. Documents must be registered within 4 months of the date of execution. Thereafter, documents can be registered within the next 4 months on payment of penalty.

Who is required to pay stamp duty and registration fee on purchase or lease of a flat or office?

A purchaser (whether on first sale from a developer or on resale of a flat) or a lessee of a flat or office or any other tenement with whatsoever description is required to pay stamp duty and registration fee.

How is stamp duty paid in Maharashtra?

Stamp duty above the value of Rs. 25,000 is payable by a pay order / demand draft / cheque drawn in favour of "The Superintendent of Stamps, Mumbai". Alternatively, a pay order can be drawn in favour of "The Reserve Bank of India - a/c Stamp Duty, Mumbai". The original instrument is then franked with the value of the stamp duty. Adhesive stamps are no longer used in Mumbai city. Stamp Duty up to the value of Rs. 25,000 can be paid in cash. A receipt is issued by the concerned office for the stamp duty amount and the same is required to be produced before Registering Authority and the time of lodging instrument for Registration.

What is the procedure for registration of an instrument?

Once adequate stamp duty is affixed on an instrument and it is dated, signed by the parties and attested (where required) by witnesses, it can be lodged for registration after payment of the registration fee. All parties signing the instrument are required to attend the office of the concerned Sub Registrar of Assurances either by themselves or through their constituted attorney under a power of attorney to admit execution of the instrument. A passport size photograph, original power of attorney, personal identification such as passport or income tax PAN Card, adequate photo copies of the original instrument are some of the essentials required for registration. After lodging an instrument, it is registered and a seal of the Sub Registrar is affixed on the instrument, thereafter the original instrument is returned to the parties.

Is there a restriction on the name in which stamp paper must be purchased?

Yes. The stamp paper should be purchased in the name of one of the parties to the instrument.

Is there a time frame within which the stamp paper must be used?

Yes. Stamp paper should be used within 6 months from date of purchase. Stamp papers not used within this period are invalid.

Is there a penalty for not paying the requisite stamp duty?

Yes. Previously, the penalty was an amount not exceeding 10 times the amount of the proper duty. As per the recent amendments, a penalty of 2% per month on the proper duty for the period of default will be levied, subject to a maximum of 2 times the deficient portion of duty. Instruments are liable to be impounded till proper stamp duty is paid.

What are the consequences for not paying stamp duty on an instrument?

In case proper stamp duty is not paid on an instrument, the instrument is inadmissible as evidence.

Is it possible to get a refund of stamp duty already paid on an instrument?

Yes. If stamp duty is paid on an instrument but the instrument is not signed by any party then an application is to be made within 6 months of the date of purchase of the stamp paper, to the concerned authorities for refund of stamp duty. The original stamp paper or paper bearing Franking is to be submitted along with the application. On receipt of such application, the concerned authorities are empowered to refund the value of stamp duty after deducting such amounts as may be prescribed.

Is stamp duty payable on a gift or resale of a flat?

Yes. Stamp duty is payable on instrument of gift or resale of a flat.

When can an instrument be impounded?

When an instrument is presented for registration and the concerned authorities have reasons to believe that the same does not reflect the true market value, steps for recovery of the stamp duty including impounding of instruments can be taken. If the collector determines that the proper stamp duty has not been paid then penalty can be levied on such instruments and till payment of deficit stamp duty and penalty Instrument can be impounded.

Is there a procedure for adjudication of stamp duty?

A person can seek the opinion of the Collector of Stamps by making an application to him for adjudication of stamp duty payable on any instrument. For this purpose, the person who is a party to the instrument has to furnish a true copy of the instrument and an affidavit stating the facts and such other evidences as required, along with prescribed fee. The Collector's opinion is final and conclusive. No appeal lies against his order of adjudication. The same can however be challenged by filing Writ Petition in High Court or Supreme Court.

Can a person grant a power of attorney for signing and registering instrument?

Yes. Persons residing abroad or those who travel frequently are advised to grant power of attorneys to facilitate better management of their flats.

Can a person grant a power of attorney for registering instruments?

Yes, but his power of attorney must be registered before the Sub Registrar of Assurances.

Stamp duty in the state of Maharashtra

Stamp duty is payable on market value or agreement value, whichever is higher. The being, the rates of stamp duty for residential / shop / office / industrial gala is 5% of the market value of the property or agreement value, whichever is higher. For property under Mira-Bhayander Municipal Corporation, Thane and Pune, currently the rate of stamp duty is 6% of market value or agreement value whichever is higher. The property not covered in Article 25 (d) of schedule 1 of the Bombay Stamp Act 1958, will attract stamp duty at the rate of 5% of the market value, even for residential property [Article 25 (b) (vi) (a)]. The above amount does not include registration fee, which is 1% of the market value or agreement value, whichever is higher, subject to a maximum of Rs. 30,000 (effective 1-4-2003).

Stamp duty is charged for every Rs. 500 or part thereof. Registration fee is charged for very Rs. 1,000 or part thereof.

Stamp duty on a leave and licence agreement

License period

Up to Rs. 2,50,000

Rs. 2,50,001 to Rs. 5,00,000*

Rs. 5,00,001 to Rs. 20,00,000*

Rs. 20,00,001 & above*

Resi.

Non resi.

Resi.

Non resi

Resi.

Non resi

Resi.

Non resi

Rupees

Rupees

Rupees

Rupees

0-12 months

600

1,200

1,200

2,400

2,000

4,000

5,000

10,000

13-24 months

1,200

2,400

2,400

4,800

4,000

8,000

10,000

20,000

25-36 months

1,800

3,600

3,600

7,200

6,000

12,000

15,000

30,000

37-48 months

2,400

4,800

4,800

9,600

8,000

16,000

20,000

40,000

49-60 months

3,000

6,000

6,000

12,000

10,000

20,000

25,000

50,000


Note*: Where the amount of average rent plus the amount of security deposit or money advanced, or to be advanced, exceed for a single term of 12 months.

Home Loan

What are the types of housing loans available?

Various varieties of housing loans are offered by different Banks and financial institutions. Prominent among these are:
Home Loans : This is the basic housing loan for the purchase of a new home, which covers the cost of the flat, deposits and charges, stamp duty and registration charges.
Home Improvement / Extension Loans : These are for the purpose of of undertaking repair works and renovations in a home that is already owned by you.
Bridge Loans : Bridge loans are for people who wish to sell their existing house and purchase another one and need finance for the new house until a buyer is found for the old one.
Balance Transfer: A balance transfer indicates the paying off of an existing housing loan and availing of a loan with a lower rate of interest.
Refinance Loans: Refinance loans are taken to pay off the debt incurred from private sources such as relatives and friends, for the purchase of your present house.
Loans To NRIs: These loans are designed as per the requirements of NRIs who want to buy a house in India.

Who can apply for a housing loan?

Any Indian citizen, including Non Resident Indians, with a steady source of income can borrow funds for financing the cost of a flat from housing finance companies or banks.

Can a Non Resident Indian avail of housing loans?

Yes, depending upon the eligibility criteria and policy of the bank or Financial Institutions.

How much can a person borrow?

Loans are generally disbursed between 70%-80% of the cost of the flat. The balance money is to be funded by the flat purchaser from his own contribution. The percentage of loan would vary from bank to bank.

How does Kothari Realty assist a flat purchaser in procuring Housing Finance?

The Kothari Realty sales team liaises with the all leading Housing Finance Institutions and Banks for project approvals, processing the loan, documentation and disbursement of loans.

What is an EMI?

Equated Monthly Installment ("EMI") is the amount comprising a portion of the interest and the principal loan amount, which is payable by a borrower to the lender every month.

How is the rate of interest calculated in India?

Interest rates vary from time to time and from institution to institution. The interest is calculated either on a daily or monthly reducing or yearly reducing balances.

What is a fixed-rate housing loan?

A fixed-rate housing loan is a loan where the rate of interest is constant through the entire term of the loan period.

What is a floating interest rate housing loan?

A floating interest rate loan is a loan where the interest rate payable is linked to the bank's internal prime lending rate (PLR) such as the base rate which rises and falls as per banks policy.

What are the repayment period options?

Repayment period options range generally from 5 to 20 years. Some of the banks or Finance Institutions may give loans up to 25 years also.

What are the charges for avaih4ng a housing loan?

Processing Fees are payable to the lender on applying for a loan and can either be a fixed amount not linked to the loan or may also be a percentage of the loan amount.
Prepayment Penalty between 1% and 2% of the amount being prepaid is charged by some institutions when a loan is paid back before the end of the agreed duration. Some of the Banks and Financial Institutions now don't levy penalty on partial prepayment.
Franking Charges as per prevailing rate of Government Authority.

What security is required for a housing loan?

The flat purchased is the primary security and is mortgaged to the lending institution till the entire loan is repaid. Additional security such as life insurance policies, shares, bonds, fixed deposit receipts, national savings certificates can also be offered, as per the requirements of the institution.

Do lending companies require guarantors?

Yes. Many lending companies require at least one guarantor or a co-applicant.

What is the time required for approval of a loan apph4cation?

Varies from bank to bank and Institution to Institution. However, usually it is 15 - 20 days for a salaried person and 20 - 30 days for a self-employed person depending on the applicant's documents.

What is the time required for disbursement of loans?

Usually loans are disbursed within 10 - 15 days after completion of verification by the institution, documentation (original agreement for sale / lodging receipt) and completion of all relevant procedures. Submission of proof that the borrower's own contribution has been paid by him to the vendor / builder / developer is also an important aspect.

Do institutions accept joint loan apph4cations?

Yes, but this policy varies from bank to bank and Institution to Institution.

What are the documents required at the time of applying for a housing loan?

The standard list of documents required of all loan applicants is as follows:
Photographs
  • Proof of age
  • Identity papers
  • Proof of residence
For salaried individuals
  • Latest salary slip
  • Last 2 years form 16 or equivalent
  • Bank statements reflecting salary credits for the previous six months
For self-employed individuals
  • Certified copies of balance sheet
  • Profit and loss statement
  • Tax challans / tax returns for the previous 3 years
For partnership/private limited companies
  • The Articles of Association
  • Partnership deed and details about the firm
For NRIs
  • Latest salary certificate specifying, name (as it appears in the passport)
  • Date of joining
  • Passport number
  • Designation
  • Perquisites and salary
  • Photocopy of labour card/identity card
  • Photocopy of valid resident visa stamped on the passport
  • Photocopy of monthly statement of local bank account
  • Property related documents

Statutory Payments

MVAT is applicable on all residential apartments sold after 1st April, 2010 at the rate of 1% of the Market Value of the property or Agreement Value, whichever is higher.

Service tax for Bundled Services (construction service + preference location) provided @ 3.09% of Agreement Value (conditions apply).

Service tax on Society Charges @ 12.36% (conditions apply).