New Delhi. The government has now started taking strict action against the trend of under-reporting the value of property to pay less stamp duty while buying and selling property in the capital Delhi. Delhi Revenue Department has directed all sub-registrar and joint sub-registrar offices to thoroughly investigate the property registration process. According to officials, the government aims to prevent under-valuation of properties and ensure that the government receives the right amount of stamp duty and registration fees. For this, the declared value of the properties and the prescribed circle rate will be specifically matched during registration.
According to the instructions, if the declared value of a property is found to be less than the circle rate, then the relevant cases will be investigated and the stamp duty and other charges payable will be recovered based on the undervalued amount. Authorities have also been asked to take necessary legal action in such cases. The revenue department has asked to especially keep an eye on those properties where basements have been included in residential complexes.
Circle rate is the minimum price that the state government sets for land, houses or other properties in an area. According to the rules, registration of purchase and sale of any property cannot be done at a price lower than the circle rate. If the market value of a property is higher, it is assessed accordingly, but the circle rate is considered the minimum basis for registration. Stamp duty is the fee that is paid to the government for registering property or documents to legal agreements and transactions between two or more parties. This fee is decided based on the value of the property or the prescribed circle rate.
Circular issued after High Court order
According to the circular, this process will be implemented under Section 47-A of the Indian Stamp Act, 1899. This provision allows action to be taken in cases where property valuation has been understated and the government has received less revenue in the form of stamp duty. Officials said that this circular has been issued following a recent order of Delhi High Court, to bring more transparency in the property registration process and prevent revenue loss.
The circular said that under the Delhi Stamp (Prevention of Under-valuation of Instruments) Rules, 2007, property owners will now have to clearly declare the plinth area and built-up area of their property. Moreover, stamp duty will not be calculated based on the value of the land alone, but including the declared area and construction cost. In case of partial sale of a property, its actual valuation will be determined in proportion to the plinth area (covered area) sold and the stamp duty will also be decided on the same basis.
Officials say that in many cases, wrong calculations are done based on maximum plinth area instead of actual built-up area, leading to undervaluation of property value and revenue loss to the government. The circular particularly raises concerns over matters to basement registration of residential properties. According to the department, in many such cases the price shown in the documents has been found to be less than the price determined on the basis of the applicable circle rate of the concerned area. This is why these cases will now be investigated more closely.
The Delhi Revenue Department has directed all sub-registrar and joint sub-registrar offices that during property registration if the declared value is found to be less than the official circle rate, the parties concerned should be informed in writing that they are paying stamp duty less than the prescribed amount. The circular also clarifies that under Section 47-A of the Indian Stamp Act, 1899 and Delhi Stamp (Prevention of Under-valuation of Instruments) Rules, 2007, such cases can be investigated where the value of the property is shown to be less than the actual value.
Will get a chance to correct the documents
If the value shown in the documents of a property is less than the circle rate, the parties concerned will first be given an opportunity to revise the same and pay the necessary stamp duty as per the correct valuation. The Delhi Revenue Department said if the parties concerned fail to amend the document or do not pay the required stamp duty as per the circle rate, the sub-registrar and joint sub-registrar will register such cases with categorical remarks. After this this document will be sent to the stamp collector for further action. Stamp Collectors have been instructed to dispose of the cases within a maximum of 3 months after receiving the documents. During this time, they will proceed with the investigation process as per the law and ensure assessment of the correct market value of the property. This system has been implemented under Section 47-A of the Indian Stamp Act, 1899 (as applicable in Delhi).
