Can exclude the value of building in the first sale deed, Tamil Nadu clarifies

IG of registration on May 11 issued an order that confines Undivided Shares (UDS) of a property under the bracket of stamp duty and registration fee.  

The Tamil Nadu government has issued an order saying sub-registrars should not insist on the inclusion of the value of building in the sale document if it is the first sale. Also, register the undivided share of land (UDS) of newly completed buildings. 

The inspector general of registration has clarified that there would be the inclusion of the value of newly built apartments or the value of construction agreement in the sale deed along with the value of UDS if the building has obtained completion certificate. It means, apart from paying 11% stamp duty and registration fees for the UDS, the buyer has to pay 11% stamp duty and registration fees for registering the building also. 

Rules for Building under construction

For a building that is under construction, besides registration of the UDS (paying 11% of the value as stamp duty and registration fees) through a sale deed, there’s a written construction agreement signed between the buyer and developer. The buyer needs to pay only 2% that is 1% stamp duty and 1% registration fees for registering the construction agreement. When the building is excluded in the sale deed, the saving for the buyer is 9% of the cost of the building. However, on the other side, there is no sale deed generated for a new apartment when the first sale takes place. When the same apartment is resold, the buyer has to pay 11% stamp duty and registration fees from USD and the value of the apartment. In effect, the building gets a sale deed only in the second sale. 

Sub-registrars refuse to include USD

Many sub-registrars were refusing to include USD alone in the sale deed of completed buildings even it is the first sale. They contended that there cannot be a construction agreement between buyer and developer when the building is completed and the regulatory agency (like CMDA or DTCP) has issued a completion certificate. Hence for completed buildings, like in the case of the second sale, both UDS and should be comprised of the building’s value in the sale deed, they insisted. 

The developer community has been arguing that even after obtaining the completion certificate, many works would be pending in the apartment, which may consist of various alterations. Hence for all practical purposes, the building must be treated as incomplete.

To conclude with, building under construction and completion buildings can be treated on par for registration purpose. In a relief for homebuyers, the registration department in Tamil Nadu has clarified that ready to occupy new apartments and buildings can be exempted for stamp duty and registration fee payment.

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