Circle Rate increased after Agreement to Sell, and before sale deed registration

Circle Rate increased after Agreement to Sell, and before sale deed registration

I am in the process of selling my residential apartment. (falling under Gurugram Distt. in Haryana)
I signed the Agreement to Sell with the prospective buyer on 17th December 2022, and the buyer paid 5% of the full sale consideration at the time of Agreement to Sell. The Agreement to Sell is notarized only, and not registered with the tehsildar office.

The prospective buyer paid stamp duty as per the 2022-23 circle rates on 21-Mar-2023 as per the prevailing circle rate at that time.

The circle rate has now increased by 10% for 2023-24. The final transaction of Sale Agreement registration with the registrar's office is not done yet, and scheduled to be done on in the next week.

Questions 1: I would like to know what applicable circle rate will need to be paid by the prospective buyer - the 2022-23 rate, or 2023-34 rate for the purpose of sale agreement registration?

Question 2: If new rate has to be paid, how can the buyer go about topping up the remaining amount of stamp duty? Will the original stamp duty paid need to be refunded and fresh stamp duty as per new rate need to be paid, can the remaining stamp duty be paid separately?

Asked 1 year ago in Property Tax

Stamp duty is payable on circle rate or sales consideration whichever is higher. In your case as mentioned by you that buyer paid stamp duty on circle rate which means sales consideration is less than circle rate. If the difference between circle rate and sales consideration is more than 10% then circle rate would be considered as full sales consideration unless supported by genuine facts for the cause of difference. Also buyer would be liable to liable to pay the tax on the difference.

1. Check from which date new circle rates are effective. You can put your facts before stamp authority that 5% of the sales consideration was paid on the date of agreement therefore value on the date of agreement should be considered for payment of stamp duty and the stamp duty has actually been paid

2. By paying the difference amount

For detailed discussion you may opt for phone consultation

Vivek Kumar Arora

CA, Delhi

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Answer 1: As per the Indian Stamp Act, stamp duty is payable on the agreement value or the circle rate, whichever is higher. Since the stamp duty was paid on 21-Mar-2023 as per the prevailing circle rate at that time, which was the 2022-23 rate, the buyer will have to pay the stamp duty difference as per the increased 2023-24 circle rate at the time of registration of the sale agreement.

Answer 2: If the new circle rate is higher, the buyer will have to pay the difference in stamp duty as per the increased rate at the time of registration of the sale agreement. The original stamp duty paid cannot be refunded, and the remaining stamp duty will have to be paid separately. The buyer can approach the bank or authorized stamp vendor to pay the additional stamp duty and obtain a franking certificate, which can be submitted along with the sale agreement for registration.

Hope you find the information helpful. You are free to contact me for further discussion.If you could spare two minutes of your time to write a review, It would be really grateful and very happy to read it.

Thank you.

Shubham Goyal

CA, Delhi

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