CHENNAI: The Tamil Nadu government has reduced the stamp duty and transfer levy for the first sale of apartment, flat, villa or row house by 3% if the property is worth less than Rs 50 lakh and by 2% if it is worth up to Rs 4 crore. The government issued an order to this effect on December 1. There has been no reduction for projects worth above Rs 4 crore. The reduction in duty is available to the property based on the composite value calculated in terms of super built-up area or value set forth in the document, whichever is higher.
So far, in TN, two documents were registered during the first sale of flat or apartment, with the department collecting a 9% cess. This included a levy of 7% on deed of sale of undivided share and 2% as registration fee. The other was a construction agreement of the building for which 1% of stamp duty and 3% registration fee were being levied. Under the new structure, there will be a single sale deed for the composite value of the building, that includes the undivided share as well as construction cost.
The decision comes after officials from TN registration and commercial taxes departments and Inspector General of Registration visited Karnataka’s registration department and submitted a report to fix the stamp duty at a reduced rate on par with Karnataka. Though in reality, the builders and real estate promoters develop the whole property into apartment premises and sell undivided share of land along with building (apartment) to individual purchasers, the practice of executing sale deed only in respect of undivided share of land is in vogue in TN.
In its report, the Inspector General of Registration stated that while registering the documents, the guideline value is reckoned for calculating the value of land and set forth value in the construction agreement is reckoned for valuation of the building. It is learnt that in respect of sale of flats, most of the states except TN are levying stamp duty and registration fee on both undivided share of land and building put together in the sale deeds.
The report also stated that some of the states are fixing a composite rate for the flat including undivided share of land and building and charging the rate on super built-up area. The report stated that in Karnataka, composite value (for land and building) is fixed in each and every apartment by Central Valuation Committee and the value of the super built-up area, computed based on the composite value fixed by CVC, is reckoned for levy of charges and ‘super built-up area’ of a flat is computed as minimum of 1.25 times of carpet area.
As a result, the government has agreed to the Inspector General of Registration proposal to let it fix the composite rate for flats and apartments, and reduce the stamp duty rates for purchase of newly-developed flats sold by promoters and land owners subject to the condition that the concession will not be applicable for second sale of flat. The provisions of stamp duty will apply for calculating the transfer duty also.
As such, stamp duty has been reduced for apartment, flats, and villas from 5% to 2.86% and transfer duty from 2% to 1.14% for flats in the range of Rs 50 lakh. Similarly, for flats above Rs 50 lakh to Rs 4 crore, the stamp duty has been reduced from 5% to 3.57% and transfer duty by 1.43%.