The Maharashtra Stamp Act 2020 and Stamp duty and registration charges on immovable property

maharashtra stamp act

The government of Maharashtra recently took many decisions related to stamp duty rates. Let us look at the decisions in detail and how they impact the buyers in Mumbai and other important cities in Maharashtra. 

What is stamp duty?

When any movable or immovable asset is sold or bought, the buyer must pay a certain amount of stamp duty to the state government. The Maharashtra Stamp Act specifies which assets and instruments are subject to stamp duty payment to the state government. The act tells us details regarding stamp duty and how much must be paid according to different property types.

In August 2020, the state government announced a reduction in the rates of stamp duty, but it has decided not to prolong the stamp duty waiver on property registrations past March 31, 2021. The stamp duty rates were reduced in two slabs as set forth by the August 2020 announcement. The first one was from September 1, 2020, to December 31, in which the duty was reduced by 3%, and the second from January 1, 2021, to March 31, 2021, where it was reduced by 2%.

Also, in its budget for the year 2021-22, the Maharashtra government deputy chief Ajit Pawar made an announcement promising a 1% reduction in the current stamp duty rates on property transactions if the house property is transferred or the registration of sale deed is done in the name of a woman. All women homebuyers will have to pay four percent stamp duty. The rebate does not apply to joint owners (Male and Female).

Understanding the Maharashtra stamp act

The act first attained assent of the precedent on 4th June 1958. Applying to all the instruments mentioned in Schedule 1, on which the states need to be paid a duty. Stamp duty is payable to the state. The recent amendments made to the Act include a revision of stamp duty on gift deeds and increased payment options. The e-payment of stamp duty was made possible by this amendment while also including revision of penalty clauses and an increase of stamp duty under certain clauses.

The charges of the stamp duty in Maharashtra

Stamp duty rates are typically calculated on the greater of the Ready Reckoner rate and the property value specified in the buyer-seller agreement. Moreover, these rates differ from state to state in India.

Criteria of fluctuation in the Maharashtra stamp duty rates 

There are many criteria on which Stamp duty rates of the property depend across Maharashtra. Some of which are. 

  • Whether the said property is in an urban area or a rural area.
  • If it falls within the municipal corporation limits, municipal council, and gram panchayat. 
  • The total cost of the transaction, etc.

The stamp duty on properties in Mumbai, Nagpur, and Pune, was charged at 5% (which included 4% stamp duty and 1% metro cess). The rates were like this due to the decision made by the Maharashtra government to reduce stamp duty on properties for two years. The Mumbai Metropolitan Region Development Authority, as well as the Municipal Corporations of Pune, Nagpur, and Pimpri-Chinchwad, were all affected by this ruling. Also, in Maharashtra, for properties priced below Rupees 30 lakh, the registration charges are one percent of the total cost of the property. And all the properties priced above rupees 30 lakh, the charges are capped at Rs 30,000.

How is it calculated?

Stamp duty is calculated using ready reckoner rates and the property value specified in the buyer-seller agreement. The stamp duty on property in Maharashtra varies according to location. For example, if a property is located within the limits of Municipal limits, then the stamp duty charge is 5% of the market value. On the other hand, a stamp duty of 3% of the market value is charged on a property residing within the limits of any Gram Panchayat.

Stamp duty on conveyance deeds 

As stated in article 34 of the Maharashtra Stamp Act, the stamp duty of a gift deed is 3% of the total value of the property. However, if the said property is a residential property or an agricultural property and given as a gift to a family without any payment. Then in such cases, the stamp duty is rupees 200.

Stamp duty rates of a conveyance/sale deed as applicable after March 2021

For a property that resides within any urban area's municipal limits, the stamp duty is 5% of the market value.

If the side property is within the limits of any municipal panchayat/ council/ cantonment of any area in the MMRD. The stamp duty becomes 4% of the market value, whereas being within a limited gram panchayat means it is lowered down to 3% of the market value.

Payment of stamp duty

If the deed is executed in Maharashtra 

All instruments that can be charged with stamp duty can be stamped before or at the time of execution. However, it can also be done the next day of the execution.

If the deed is administered out of the territory

In this case, the property can be stamped in three months after it is primarily received in India.

Some other things that should be kept in mind while making the payment.

  • Make sure that the date of issue of the stamp paper is not older than six months than the date of transaction. Moreover, stamp paper should not be in the name of the CA or lawyer of the parties, it must be in the name of the party itself.
  • The non-reusable adhesive or impressed stamps can be used in paying the stamp duty charges. It is made sure that these cannot be used again by cancelling them at the time of execution.

How to pay stamp duty online 

Several state governments have implemented e-payment of stamp duty to streamline the property registration process. The e-stamp registration service would allow home buyers to pay stamp duty, registration fees, and other fees online with a few clicks. The online stamp duty payment procedure is quick, easy, and transparent. To pay stamp duty, home buyers will need to follow a few simple steps.

  1. The first step is logging on to the Maharashtra stamp and registration department website. If you are not registered, you can pay using the pay without registration option.
  2. If you choose to pay without registration, then you will land on a page where you need to choose the citizen option and then select the kind of transaction you want to do.
  3. Select ‘Make Payment to Register your Document.' You can now choose to pay stamp duty and registration fees together, or stamp duty only, or registration fees only.
  4. After arriving at this page, you will be required to enter certain information about the property, its surrounding area, party details, etc.
  5. Select a payment method, and once completed, generate the challan, which must be presented at the time of deed execution.

Offers on stamp duty in Maharashtra

Festivals like Gudi Padwa and Akshay Tritiya are celebrated with excitement in Maharashtra. In order to boost sales during these festivals, developers have announced a lot of offers and discounts, including discounts on stamp duties and registration fees. All this is done to bring back old buyers and attract new buyers to the market looking for investment in real estate. Previously, the Maharashtra National Real Estate Development Council (NAREDCO) announced that they would absorb the 3% stamp duty on property purchases. They also promised to provide a waiver to home buyers until December 31, 2020.

Past property documents 

According to the Maharashtra stamp act, the collector of a district can verify if appropriate duty has been paid on a deed by requesting documents within the period of 10 years from their registration date. The Bombay High Court has held that at the time of subsequent sale, stamp duty cannot be collected for past documents that have been inadequately stamped.  Furthermore, if the historical documents are required to be stamped, the stamp duty shall be recovered only at the market rate in effect at the time of the transaction. This means that stamp duty charges cannot be applied retroactively.

How Maharashtra Stamp Duty impacts the property registrations?

Registrations of property have been lessened by over 50% in April than in March. This was due to the stamp duty rates being restored to 5% again by the Maharashtra government. 

As the state government data suggests, registrations across States other than Mumbai were at 90,500 on April 29. However, as the stamp duty relief was set to be lifted, the month of March 2021 saw a record spike of 2.13 lakh registrations.

According to previous media reports, the announcement of the stamp duty reduction boosted property sales in the state, particularly in Mumbai, where sales of luxury flats spiked following the announcement.

The media reports, which were published between September 1 and October 17, 2020, say that 25 registration offices received high-end apartment registrations worth Rs 2,200 crores. Even tv and movie stars purchased property during this time and spent large sums of money as stamp duty. According to media reports, the number of property registrations that were made between September and November 2020 was the highest in the previous four years.  These media reports also said that almost eight lakh documents were recorded from the announcement till November 2020.

The premium for real estate projects reduced in Maharashtra

The Maharashtra government declared a 50% reduction in construction premiums on January 6, 2021. The move will encourage new launches in the Mumbai Metropolitan Region (MMR), stalled due to the Coronavirus pandemic and high start-up costs. Builders will be able to take benefit of the discount until December 31, 2021.

After being hit by the pandemic, the Maharashtra state's real estate market has seen an uptick. All thanks to the Maharashtra government's stamp duty cut and the RBI's four-month hold on interest rates.

The decrease in premiums is said to benefit the Mumbai market, as the city collected premiums under various categories, which is way more than other top cities in the country.

High premiums tend to place a financial burden on developers, resulting in higher prices for home buyers. In the current economic climate, this excellent move would alleviate the burden and lower the prices, resulting in an increase in sales during the coming months.

 The Bombay High Court delivered a judgment recently, in which they ordered the Maharashtra government to either refund excess stamp duty within four weeks of receiving the application or paid interest at the rate of 12% per annum.

The Petitioners of the said case were Palava Dwellers and Macrotech Developers Ltd. They bought a piece of land that was instructed as 'integrate township projects' (ITPs). The land was located at Kalyan and Bhivani, which reduced the stamp duty for agreement and conveyance by 50% in special township projects (STP).

 The state, however, denied the claims that the ITPs concession and the recent waiver on the instrument of conveyance or agreement to sell any immovable property could not be combined. After the petitioner appealed, the high court held that both the waivers could be applied together, and the state was to refund the excess stamp duty within the given time limit.

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Frequently Asked Questions (FAQ's)

Can we pay stamp duty online for property in Maharashtra?

Yes, you can easily pay your stamp duty online by logging into the Maharashtra stamp duty online payment portal.

What are the stamp duty charges on property in Maharashtra?

The stamp duty rates vary across Maharashtra depending upon where the property is situated and whether that area is an urban area or a rural area.

What is stamp duty?

Stamp duty is a tax paid to a state government by the buyer when a movable or immovable asset is transferred to a different owner.

What does MMRDA stand for?

MMRDA stands for Mumbai metropolitan region development authority.

How is stamp duty calculated?

Stamp duty is calculated by using ready reckoner rates or directly through the market value.

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