In yet another blow to homebuyers, Tamil Nadu government has done away with the three-year-old practice of separate registration of undivided share (UDS) of land and construction agreement. From now on, in cases of completed constructions, there shall be only one combined sale deed, entailing a stamp duty and flat registration fee of 9%
This means, a buyer will end up paying about 50% more towards registration charges. Since 2020 registrations were being done in two parts – one for UDS at 9% registration fee and the other for construction agreements for 4% fee.
For example, in case of a flat costing 1 crore, a buyer would have paid total registration charges of 6 lakh if he had shown 40 lakh as UDS value and 60 lakh as building value. For the same flat, he will pay 9 lakh as fee now – a flat 9% fee for Rs 1 crore.
This is the third fee hike by the registration department in the past few months. Already, it has increased the guideline value and 20 services of the department, including construction agreement and power of attorney.
Expectedly, builders have represented to the government requesting immediate rollback of all these hikes, saying it has adversely impacted the real estate sector. “The purchase capacity of customers will go down drastically due to the additional financial burden, which in turn will affect sales and eventually slowdown the industry,” said Confederation of Real Estate Developers’ Associations of India (CREDAI) national vice-president (south) S Sridharan.
“With respect to the first sale of the flat, the builders in the state are executing two deeds. For the sale deed, the stamp duty and Registration fee are 9% and 4% for construction agreement. All other states except TN are taking the total built up area of the flat sold multiplied by the rate fixed for the flat and collecting stamp duty and registration fee applicable to that state,” said an official from the registration department.
But if the buyer books a project in advance, they will have to shell out 5 per cent GST on the total value and the total expenses would be 11 lakh. For projects with completion certificates, GST is exempted, and the buyer can save 2 lakh, said an official from the registration department.
“Earlier, builders were registering UDS land and construction agreements even after obtaining completion certificates. This move will give legal safety to the purchaser,” said B Jothi Nirmalasamy, secretary, commercial taxes and registration department.
CREDAI’s Chennai unit also expressed concern over the flat registration cost of 9% on the total cost of the apartment. “Toying with registration charges will discourage the prospective buyer from taking a decision. These decisions are taken without a proper public consultation,” P Kruthivas, secretary, Credai Chennai.
Sivagurunathan, president, CREDAI Chennai, said the hike would affect property purchasers who have already purchased the flat but not yet registered.
