How to Save Stamp Duty & Registration Charges

How to save stamp duty and registration charges is a tricky question. Before discussing the same, lets understand what is stamp duty. According to wikipedia, Stamp Duty is a tax that is levied on documents. At the time of transferring ownership of property i.e. Registering Sale Deed, the buyer need to pay stamp duty & registration charges to Govt. The Stamp duty and Registration Charges vary from state to state. Some states offer discount on Stamp Duty e.g. if the property is registered in the name of a woman then you can save stamp duty. In Delhi stamp duty to be paid is 6% but if the property is registered in the name of a woman then stamp duty to be paid is 4% of Total Sale Deed value. Thus you will save stamp duty to the extent of 2% of Sale Deed Value. For the benefit of readers, I am listing down the current stamp duty charges in various states. These charges are indicative and may change. Also some state govt levy different stamp duty charges for different areas like urban & rural.

Chandigarh: 0%

Gujarat: 3.5%

Uttarakhand: 4%

AP, J&K, Punjab, Haryana: 5%

Delhi, UP, Bihar, Jharkhand, West Bengal, Sikkim & All NE States: 6%

Maharashtra, Karnataka, Kerala, Goa, Odisha: 7%

Chhatisgarh: 7.5%

Rajasthan, MP, TN & Himachal Pradesh: 8%

It is mandatory to pay stamp duty as per the stamp duty valuation fixed by the Registrar of your area under the stamp duty act of your state. Registration Charges are over & above Stamp Duty and is levied @ 1% of Total Property Value as per sale deed. Now lets understand how to save stamp duty and Registration charges with the help of following example.

Mr A is buying a 1000 sq ft flat in Delhi for Rs 1 Cr. Here 1 Cr is Market value of the flat. Now the sale agreement should be executed for total amount i.e. 1 Cr but you can save stamp duty by registering the property at circle rate or govt guidance value. Circle Rate or Govt Guidance Value is the minimum value at which the property can be registered. In laymen terms Govt Guidance Value or Circle Rate is the market value of property as per State Govt. It is always lower then the existing market value of property. In this example, Circle Rate or Govt Guidance value is Rs 6500 psf therefore according to Govt the Circle Rate or Govt Guidance Value of the property is 65 Lacs whereas actual market value is 1 Cr.

By registering the property at Circle Rate or Guidance value you can save substantial amount in stamp duty & registration charges. If you register the property @ 1 Cr then you will be paying 6 lac as stamp duty & 1 Lac as Registration charges in Delhi therefore total payout is 7 lac for registration.

In order to save stamp duty, you decided to pay stamp duty and registration charges @ Guidance Value or Circle Rate then you will register the property @ 67 Lacs (65 Lacs as Circle Rate + 2 Lac for Car Parking). It is mandatory to include Car Parking charges in Circle Rate or Guidance Value to arrive at final registration value. Therefore stamp duty to be paid is  4.02 Lac and Registration Charges of 0.67 Lacs. Total Payout is 4.69 Lacs.

Total saving on stamp duty and registration charges in this case is equal to 7 Lac – 4.69 Lac = 2.31 Lac.

Now 2 big questions, to save stamp duty you will register the property at guidance value or circle rate but (a) How to convince the Seller for same & (b) How will you show the transaction of balance 33 Lacs i.e. 1 Cr – 67 Lacs.

Answer is if the seller agree to register property at Guidance Value or Circle Rate then he will save on Capital Gain Tax therefore he will not mind registering property at circle rate or guidance value. Regarding transaction of balance 33 Lacs, as the Sale agreement is signed for 1 Cr & property is registered for 67 lacs. Buyer can sign another agreement with seller which is called Deed of Transfer of Rights (DOTOR). Balance transaction of 33 Lacs can be shown in DOTOR, which will complete the financial transaction. I will discuss about DOTOR in more detail in my next article.

The only flip side of registering property at Guidance Value / Circle Rate to save stamp duty is that some Home Loan Providers like SBI will only provide Home Loan of upto 80% of Sale Deed Value not the Sale Value e.g. In this case if buyer avail home loan from SBI then SBI will provide maximum loan of 53.6 Lac i.e. 80% of 67 Lacs (excluding stamp duty & registration charges). Whereas in case of other lenders like HDFC, loan will be 80% of Sale Agreement Value i.e. 80% of 1 Cr = 80 Lacs as Home Loan.

This method to save stamp duty is very much legal and you can save good amount of money for your home furnishing ;)

First Information Report (FIR)

What is First Information Report (FIR)

The first information report means an information recorded by a police officer on duty given either by the aggrieved person or any other person to the commission of an alleged offence. On the basis of first information report, the police commences its investigation. Section 154 of the Code of Criminal Procedure, 1973 defines as to what amounts to first information.

The said section reads as under:-
154. Information in cognizable cases
(1) Every information relating to the commission of a cognizable offence, if given orally to an officer-in-charge of a police station, shall be reduced to writing by him or under his direction, and be read over to the informant; and every such information, whether given in writing or reduced to writing as aforesaid shall be signed by the person giving it, and the substance thereof shall be entered in a book to be kept by such officer in such form as the State Government may prescribe in this behalf.

(2) A copy of the information as recorded under sub-section
(1) shall be given forthwith, free of cost, to the informant.

(3) Any person aggrieved by a refusal on the part of an officer-
in-charge of police station to record the information referred to in sub-section (1) may send the substance of such information, in writing and by post to the Superintendent of Police concerned, who if satisfied that such information discloses the commission of a cognizable offence shall either investigate the case himself or direct an investigation to be made by any police officer subordinate to him, in the manner provided by this Code, and such officer shall have all the powers of an officer-in-charge of the police station in relation to that offence.

The provision in section 154 regarding the reduction of oral statement to writing and obtaining signature of the informant to it, is for the purpose of discouraging irresponsible statement about criminal offences by fixing the informant with the responsibility for the statement he makes.

Refusal by the informant to sign the first information is an offence punishable under section 180 of the Indian Penal Code. The absence of signatures on the first information report by the informant, however, is not necessary to the extent that it will vitiate and nullify such report. The first information is still admissible in evidence.

In order to constitute an FIR in terms of section 154 of the Code. of Criminal Procedure, 1973 two conditions are to be fulfiUed:-
(a) what is conveyed must be an information; and
(b) that information should relate to the commission of a cognizable offence on the face of it.

In other words, FIR is only a complaint to set the affairs of law and order in motion and it is only at the investigation stage that all the details can be gathered. In one of the judgments, the Madhya Pradesh High Court observed that the report of the crime which is persuading the police machinery towards starting investigation is FIR, subsequent reports are/were written, they are not hit under section 161 of the Code of Criminal Procedure, 1973 and cannot be treated as such.

Who can File an FIR?
First Information Report (FIR) can be filed by any person. He need not necessarily be the victim or the injured or an eye-witness. First Information Report may be merely hearsay and need not necessarily be given by the person who has first hand knowledge of the facts.

Where to File an FIR?
An FIR can be filed in the police station of the concerned area in whose jurisdiction the offence has occurred. A first are to obtain information about the alleged criminal activity so as to be able to take suitable steps for tracing and bringing to book the guilty person.

Its secondary though equally important object is to obtain early information of an alleged criminal activity and to record the circumstances before the trial, lest such circumstances are forgotten or embellished.

Why FIR should be filed promptly
This is the golden principle of law prescribed in the Code of Criminal Procedure, 1973 that the First Information Report should always be filed promptly and without wasting any time. Such type of report gains the maximum credibility and is always welcome and appreciated by the courts.

According to Supreme Court the FIR recorded promptly before the time afforded to embellish or do away with the evidence is useful. It eliminates the possible chance of giving rise to suspicion.

Is there time duration fixed for Filing an FIR?
We have already emphasized this fact that as far as possible and practicable, every FIR should invariably be filed promptly, expeditiously and without wasting any time. There may be circumstances where some concession of time must be given in filing the FIR But there must be cogent reasons for reasonable delay in filing the FIR under the compelling circumstances. Judges with lot of wisdom and experience can use their discretion judiciously and in the interest of justice in each and every case. However, no possible duration of time can be fixed for applying the test of reasonableness to the lodging of an FIR as we have already explained. It depends upon facts and circumstances of each case. The delay in lodging the FIR as such is not fatal in law if the prosecution substantiated the factual difficulties encountered by the persons lodging the report.

Following are the reports or statements which do not amount to be an FIR:-

1. A report or a statement recorded after the commencement of the investigation (sections 162 and 163 of the Code of Criminal Procedure, 1973).

2. Reports not recorded immediately but after questioning of witnesses.

3. Reports recorded after several days of developments.

4. Information not about occurrence of cognizable offence but only cryptic message in the form of an appeal for immediate help.

5. Complaint to the Magistrate.

6. Information to beat house.

7. Information to the Magistrate or police officer on phone.

8. Information received at police station prior to the lodging of an F.I.R.

It was held in Damodar v. State of Rajasthan, AIR 2003 SC 4414: 2003 AIR SCW 5050: 2003 (4) RCR (Cri) 355 (SC) that if the information was conveyed to police on telephone and DO entry was made, it will not constitute an FIR even if the information disclosed commission of cognizable offence.

Living Separately 13B

In all the three Acts, it is one of the condition that both the parties must have been living separately for a period of one year though under the Christian Divorce Act the period is of two years.

Living Separately for a period of one year should be immediately preceding the presentation of the petition. It is necessary that immediately preceding the presentation, the parties must have been living separately. The expression 'living separately' connotes not living like husband and wife. It has no reference to the place of living. The parties may live under the same roof by force of circumstances, and yet they may not be living as husband and wife. The parties may be living in different houses and yet they could live as husband and wife. What seems to be necessary is that they have no desire to perform marital obligations and with that mental attitude, they have been living separately for a period of one year immediately preceding the presentation of the petition.

In Kirtibhai Girdharbhai Patel v. Prafulaben Kiritbhai PateI,
A joint petition filed by both the parties. It was a common contention that on account of broken marriage, the spouses have been residing separately and their relation, as husband and wife, has not been consummated since 1986. However, the trial court dismissed the petition holding that one of the conditions that spouses must have been living separately for one year or more was not satisfied as the spouses stayed together. However, the High Court did not agree and held that this condition have been living separately for a period of one year will be fulfilled even if they have been living under one roof, but the marriage has not been consummated.

Living separately for one year is sine qua non for filing a petition under section 13B of the Act. These words "living separately" for a period of one year came up for interpretation before the Bombay High Court in Miten v. Union of India where the petitioners were married on 29-4-2007 according to Hindu rites and customs. The marriage between the parties was registered in accordance with law. After the marriage, they cohabited together in Bombay till 2-8-2007, when matrimonial differences arose between them. They were living separately since 2-8-2007. Attempts for reconciliation failed. To put an end to their marriage, they applied for divorce by mutual consent under section 13B of the Act. On 30-10-2007, when the matter came up before the Principal Judge of the Family Court, vide order dated 13-10-2007, the petition was rejected. The petitioners assailed the order of the Family Court by way of writ petition before the Hon'ble High Court.

The ground of rejection by the Family court was that the marriage took place on 29-4-2007 i.e.; only six months back and section 13B, does not allow the parties to come to the Court for divorce by mutual consent unless they complete one year or more separation. The parties contended before the Hon'ble High Court that the pre- condition that they should have lived separately for a period of one year or more for obtaining divorce by mutual consent under section 13B of the Act was unconstitutional, arbitrary and tantamount to an artificial classification which was impermissible and such a pre-condition was contrary to the object of insertion of section 13B of the Act.

The primary contention raised before the Court was that:

the condition No. (i) they have been living separately for a period of one year, and

condition No. (ii) they have not been able to live together were merely directory and can be suitably waived or altered by the Court depending upon the facts and
circumstances of the case and compliance of these conditions was not mandatory.

The Hon'ble High Court while taking note of divergent views of the different High Courts with regard to waiver of six months period as mandatory or directory, held that period of one year "living separately" is sine qua non for filing of petition under section 13B. Its waiver was not permissible as per any settled corner of interpretation.

It observed:

"the Legislature in its wisdom and being aware of other existing provisions of the Act, other laws and the opinion of the society, opted for insertion of section 13B in its present form without any intent to convert divorce from statutory satisfaction to whim of the parties. The period of one year 'living separately' is sine qua non to the filing of the petition under section 13B and as such, its waiver would be impermissible as per settled corner of interpretation. The Court gets jurisdiction to entertain and decide the petition only after these ingredients are satisfied: Non-compliance of these provisions may even affect the jurisdiction of the Court as the petition would lie beyond the statutorily specified essentials and, thus, in law, be a defective or an incomplete petition.

It also held that while interpreting statutory provisions, Court would not add or subtract words from section nor would it give meaning to language of section other than what is intended on plain reading of provision.

This case shows that period of one year prescribed under section 13B for "living separately" is sine qua non for filing of the petition under section 13B. It cannot be waived by the Court. Not only this, this case also shows that even the period of six months which has been held by some of the Courts as Directory is not so. It is mandatory period and the same also cannot be waived.