As i mentioned in my previous post that i will write a separate article on Deed of Transfer of Rights. To understand the context & background of Deed of Transfer of Rights, I would request you to read the article How to Save Stamp Duty & Registration Charges before proceeding further.
Deed of Transfer of Rights is executed to legally bridge the transaction gap between Sale Agreement Value and Sale Deed Value if the property is registered at Guidance Value or Circle Rate. Taking forward the same example of Mr A, who bought flat in Delhi for 1 Cr but registered at 67 Lacs as per circle rate. Now Mr A need to show transaction of balance amount i.e. 33 Lacs to bridge the gap between Sale Agreement Value of 1 Cr & Sale Deed Value of 67 Lacs.
Mr A will execute the Deed of Transfer of Rights with the seller. 33 Lacs paid by Mr A under deed of transfer of rights is paid to the seller towards the miscellaneous cost i.e. cost of the fittings, fixtures with ultra modern materials including air-conditioning, interiors, wardrobes, wood work, kitchen cabinets, modular kitchen, bathrooms with luxury fittings and bed rooms and drawing room fitted with curtains, furnishings, and designed furniture, lights and imported lamp shades etc inclusive of all house hold articles together with all deposits made to Owners Association and including Corpus/sinking fund, club house membership, deposit made for electricity & water connections.
In laymen terms, Sale Deed is only for basic structure and through Deed of Transfer of Rights the “Seller” relinquishes all his right / claim over the above said deposits or benefits generated/arising out of the said deposit along with relinquishing his rights on all the materials, fittings, fixtures & furniture of the house to the purchaser. It cannot be executed for sale and purchase of Land / Plot.
The advantages of Deed of Transfer of Rights are as follows
1. Savings on Stamp Duty
2. Very Easy to execute on Stamp Paper of Rs 200
3. Registration of Deed of Transfer of Rights is not required
4. Deed of Transfer of Rights can be simply “Notarized” in front of 2 witnesses
5. Deed of Transfer of Rights is Legally valid document.
Few important points to be considered while making Deed of Transfer of Rights
(a) It should include complete payment details/breakup of total sale value. Even if payment details are included in Sale Deed then also mention in Deed of Transfer of Rights
(b) It should be executed only after execution of Sale Deed
(c) It should contain complete details of property
( d) Ideally, it should be signed by Lawyer / Doctor as a witness
(e) Deed of Transfer of Rights is valid in all States of India
Income Tax and Deed of Transfer of Rights
Maximum Income tax benefits from Deed of Transfer of Rights can be availed when it is executed both at the time of buying and selling of property. The income tax treatment vary from case to case basis and can only calculated after going through complete payment details of both buyer and the seller. Broadly speaking Deed of Transfer of Rights has following Income tax implications
Buyer:
From income tax perspective, buyer can reduce cost of acquisition of property to circle rate or guidance value which will help in saving Long / Short term capital gain tax at the time of sale of property. Only suggestion is that buyer should execute Deed of Transfer of Rights both at the time of purchase and sale of property to get max income tax benefits. Its dual benefit for buyer as buyer will save Stamp Duty at the time of purchase and save capital gain tax at the time of sale. Through intelligent planning, the tax outflow can be reduced considerably in property transaction.
Seller:
Seller can reduce consideration value by executing Deed of Transfer of Rights. It will help in savings of capital gain tax. Any gain from Deed of Transfer of Rights is clubbed under “Income from other Sources” and is taxed at marginal rate i.e. as per income tax slab rate. Gain can be calculated net of difference between value of Deed of Transfer of Rights and cost of House Furnishing. Seller should have House furnishing bills to support cost of furnishing for tax calculation.
To download Deed of Transfer of Rights CLICK HERE
Copyright © Nitin Bhatia. All Rights Reserved.
Hi Nitin, Very informative and useful article. Please share if you have any sample of deed-of-transfer-of-rights. Excellent article. This concept of this deed-of-transfer-of-rights was neither read nor heard before. Please do keep writing and enlighten the community.
Thanks for liking the post. You may download sample Deed of Transfer of Rights from following link
https://drive.google.com/file/d/0BzYgxNnKcwg3bWo3dnJFVE5zRWc/edit?usp=sharing
Sir,
I am buying flat following the same method as suggested., by using deed of transfer of rights,I wanted to understand tax implication for both the buyer and seller
E.g flat is for 90 lakh and i need loan on the amount.. I can register at GV which is 60 lakh..my deed of transfer of right is on 30 lakhs..what is going to be sellers tax implication on the same?
Thanks
Seller will save the Long / Short term capital gain tax (as the case may be) on 30 Lacs in your case i.e. amount mentioned in Deed of Transfer of Rights. For LTCG/STCG he can consider 60 Lacs i.e. Sale Deed value.
Also note that 1% TDS to be deducted by buyer i.e. by you will be on total property value i.e 90 Lacs.
Buyer will only save the Stamp Duty in this transaction.
Nitin Sir
Would the amount shown on DTOR attract regular income tax rates? I understand that it will save on capital gains tax, but don’t I have to pay any tax on the DTOR? is it tax free? do I have to account for it?
You are asking from buyer perspective or seller perspective.
Dear Mr. Nitin,
Please help in the response to the above question (on taxation) from the seller’s perspective.
As i mentioned Seller will save the Long / Short term capital gain tax (as the case may be) on amount mentioned in Deed of Transfer of Rights. There will be no tax as DOTOR will be executed against house furnishing provided the seller can justify the amount charged for same through supporting bills and documents.
Hi Nitin
My question is in the context of buying a plot where Market value is 1 Cr but Guidance value is 60 L.
1. If it’s legal to register at lesser money to save stamp duty , why should we even execute DOTR ? Is it to cover any future issues around difference between Registered money (60L) and Overall transaction money (1 Cr) ?
2. How does DOTR make sense in case of Plots for Market Value – Registered Guidance Value ? For home / flat , we could justify 40L but how can we do that for plots ?
3. Is this DOTR to protect Seller or buyer or some thing else ?
1. Yes it is legal. If you are not hiding any facts than there will not be any issues
2. You cannot make DOTOR for plots
3. To Protect Buyer
Thank you Nitin. What are the options i have i am buying plot to cover the difference between Guidance and Market Value ? I was looking for something like DOTOR while buying plot.
You can sign agreement to build/construction agreement to cover the gap but it has lot of legal fallout which i will not suggest. I am sorry but for Plot purchase there is no other option.
Thanks Nitin. In essence it gets to that we can’t have different value for Sale Agreement and Sale Deed in case of buying plots. Is that true ?
You are Right
Dear Nitin,
I bought property in 2008 in Kharghar (Navi Mumbai ).Bought it from Bank of Baroda approved builder.His project was approved so i decided to bought it.I have following papers :
1-Agreement for sale
2-regn 39 m
3-regn 63 me
4-receipt from bulider for payment
5-possession letter
6-OC CIDCO
7-CC CIDCO
8-CIDCO ASSESSMENT ORDER
9-DEVELOPMENT PERMISSION FROM CIDCO
10-Society formed now 2014
11-Maintenance receipt
12- Electrical bill still on builder name.
What more document i need to keep myself update to be legally strongest owner?
Pls check my following post
https://www.nitinbhatia.in/real-estate/list-of-documents-required-for-property-purchase-or-home-loan/
Hi Nithin,
I did not understand, if this really there to protect buyers, I think this should be more of issue to sellers as they need to show where they got the extra money from if sale deed is of less amount than agreement. My example: I purchased a property and got this registered at guidance value. Property market value 60L, Registered at 40 L. I paid 15 L and got the receipt from seller. HDFC paid balance in 2 DD’s 25 Lakh and 20 Lakh. 25 Lakh DD We mentioned in sale deed as advised by HDFC and completed transaction. Seller can have more issue as how can he show where he got extra 20 Lakhs? Pls advise.
Deed of Transfer of Rights is beneficial for both buyer and seller
From Buyers Perspective:
If sale agreement is of 60 Lacs and property is registered at 40 Lacs than why seller paid 20 Lacs more. Deed of Transfer of Rights address this issue. Capital gain is not an issue for buyer as the amount paid under Deed of Transfer of Rights is basically for house furnishing not for property. Capital gain is applicable on property not for House furnishing. Through this route, basically buyer is segregating the total value in 2 parts i.e. amount paid for property and separate amount for house furnishing.
From Sellers Perspective:
Seller is only receiving amount mentioned in Sale Deed towards property thus for capital gain, he/she can show the sale deed amount. Rest amount he is receiving for house furnishing which cannot be labelled as Capital Gain. Lastly as the Sale Agreement is only signed for Home Loan & is not registered with Govt therefore seller can conveniently show sale deed value as transaction value of property.
In case, if someone can question from where seller received 20 lacs, he can show the sale agreement instead of sale deed. Sale Agreement is also legally valid document therefore there is no issue for seller but there is problem for buyer if the gap is not bridged between sale agreement value and sale deed value.
Thanks for the reply. Your comment “there is problem for buyer if the gap is not bridged between sale agreement value and sale deed value”. What are the actual problems for buyers here, if this is not done, any legal issues?
Problem is that you paid 100 Rs towards sale of property and registered property @ Rs 60 than for what balance Rs 40 is being paid. To bridge this gap, Deed of Transfer of Rights is executed. No legal issue as such.
Nitin,
First off, heartfelt thanks for wonderful information provided through articles in your blog. I have a few queries regarding DOTOR. Please advise at your convenience.
1.I assume DOTOR can be executed in any state. It doesn’t matter if the property and buyer are in Mumbai and the seller is in Delhi. Right?
2. I plan to buy a property of market value Rs.1 Cr and register it for Rs.70 lacs which is slightly above Govt. guideline value. In this case, my banker is saying he can provide me loan only for 56 lacs and my banker’s rules mandates me to register the sale agreement also during the time of registering sale deed. In this case, I am planning to show 70 lacs are market value of property in both sale agreement and sale deed. Banker will pay Rs.56 lacs to the seller and I will pay Rs.14 lacs to the seller using DD or cheque. For rest 30 lacs, I am planning to use DOTOR and pay the seller using DD or cheque since the seller is reluctant to accept cash. Let me know if this is feasible and legal. Also, if it is legal, how can I convince seller that DOTOR is completely legal and he does not have to pay capital gains tax on the amount received through DOTOR?
1. Right
2. Seems your loan is from PSU Bank like SBI. If your Sale Agreement and Sale Deed are executed at 70 lacs than you cannot execute DOTOR. Reason being you final absolute consideration value is 70 Lacs therefore additional 30 Lacs is not part of total consideration value. DOTOR is executed to cover gap between consideration value and registration value.
Capital gain is on property appreciation but not applicable on property furnishing. DOTOR deals with furnishing part of the property.
Thanks for quick response. Yes, I am trying to get loan from a PSU. In this scenario, if I put a Sale agreement for 1 cr and on sale deed, register property for 70 Lacs, can I execute DOTOR for 30 lacs? Since lender mandates me to register sale agreement along with sale deed, this may not work. Correct?
You cannot register 2 documents for same property at different consideration value. One of the option is to get sale agreement notarized instead of registering it. In this case, you can execute DOTOR.
Thank you Nitin! Have a great weekend.
Dear Nitin Sir,
Please let me know that if the gap is not bridged between sale agreement value and sale deed value, then how can it be a problem for buyer under both situation i.e if has black money and if not ? Please mail me Format for DOTOR.
Eagerly looking for your reply.
It is perfectly fine provided entire money is paid through cheque or DD. You may download DOTOR from following link
https://drive.google.com/file/d/0BzYgxNnKcwg3bWo3dnJFVE5zRWc/edit?usp=sharing
Hi
I am planning to purchase an independant house for 45 Lakhs from an Individual(Not Builder) in Kerala.
House is under construction and nearing completion.
Fair value price of land measuring 5 cents is 6 lakhs.
Should I show the balance as the value of house in the Sale deed. or
Can I execute a DOTOR for the the balance amount.
I want to pay the entire 45 lakhs htro’ cheque.
Thanks
Raju
Chennai
If cost of land is 6 Lacs than you should add approx Rs 1500 psf as Construction cost. I don’t know the built up area. I am assuming its 1000 sqft. Your construction cost will be 15 Lac therefore you should show approx 21 lacs in Sale Deed and rest 24 Lacs in DOTOR for house furnishing.
In one your recent comment, you said that DOTOR is not allowed in case of Under Construction Property. Please clarify.
– Nilesh
DOTOR is executed towards house finishing and furnishing. In case of under construction property such charges are not applicable. Please check my post for more details.
Hi Nitin,
I came across your article with regards to saving stamp duty as well as DOTOR and found them quite helpful. I am planning to purchase a row house in Goa for 75 lakhs. The agreement with the seller is that 40% will be paid upfront and we will conclude the deal by this November end.
I was told stamp duty is 3% of the sale value. Now in this instance, is it possible for us to go in for Govt Guidance Value (assuming it is done in Goa)? Since we are making an upfront payment of 30 odd lakhs, is it possible to show this amount as DOTOR (it is a fully furnished villa)? If this is a win win for both buyer and seller, I am sure the seller would go in for it. Your advise? Thank you.
DOTOR is basically payment for house furnishing so legally you cannot pay any amount for furnishing before purchase. The option to show upfront amount towards DOTOR is ruled out.
You may go for Govt Guidance Value registration, it is perfectly legal.
I would suggest you to execute a Sale Agreement at this stage. Mention all terms and conditions like payment terms and by when sale will be concluded etc. Also show 30 Lacs as token advance towards the deal. Do mention the clause that Seller will return double the amount if he backs out from the deal and if you back out, amount will be forfeited by the seller…As the registration is 6 months away therefore to safeguard your interest its better to execute legal sale agreement.
I have sell my property at gujurat gidc,i have all papers but party is asking about lease deed,deed of assessment and convince,allotment letter and all transfer order.
I have all transfer order,allotment letter but i didnt understood lease deed and deed of assessment and convince what is this?
SIR PLS HELP ME
Lease Deed is required if you have put your property on rent in past or is currently rented out.
Reg rest 2 i.e. deed of assessment and convince, you need to check with buyer why they are demanding same i.e. purpose.
Ok sir thanks,but i have not given on rent i have used it for my purpose,is both i.e. assessment,convince and lease deed i do not have and is it compulsory in transferring
You may need to check with buyer why they need these documents. They are not compulsory as such but under certain circumstances, these documents are required.
Sir please give me details whats this and is it compulsory for transfer
Please check out the post to know more about Deed of Transfer of Rights. It is not compulsory.
Hi Nithin,
I see most of the items included to cover the gap between sale agreement and sale deed are expensive furniture and fittings.
My question is can we include normal maintenance works in this document?
In my case the prospective buyer has requested to carry out certain works like re-painting , re placement of some doors and windows , grill work to enhance security , laying of tiles in the land part etc.(I am selling independent house in 5 cent land).
regards,
Renjith.
You cannot include maintenance work. The transaction should be related to fittings, fixtures or furniture. You can include grill work, ceramic tiles etc in DOTOR but cannot include re-painting, repair etc.
Hi Nitin,
Thanks for this article on DOTOR.
After reading your article I have decided to prepare one for the sale I recently did. I went through your article and the
Q&A below and have also seen the sample format you have given.
I have a few questions regarding a sale done recently.The details are given below.
1. Executed Sale agreement 48 lakhs (June 1st )
2. Received Token advance cheque 10 lakhs (June 1st) from buyer
3. Executed Sale deed 29 lakhs (July 1st ) this is the guidence value here.
4. Received Bank loan cheque 29 lakhs (July 1st)
5. Received Bank top-up loan cheque for 3 lakhs (July 1st)( The bank gave an extra 3 lakhs for furniture,fittings etc.)
6. Received balance amount of 6 lakhs as 5 lakhs cheque and 1 lakh cash from buyer (July 1st)
I plan to prepare a DOTOR now which mentions the sale deed of 29 lakhs and the difference amount of 19 lakhs towards
furniture, fitting and purchase of existing movable household items etc.
Given the above details do you see any issues in preparing DOTOR.?
Do you see the need to have any more supporting documents here.?
regards,
Sree.
I don’t foresee any issue. Just get it Notarized.
Thanks for the reply.
Hi Nitin,
Thanks for the wonderful article. My doubt is does the Home Loan giving bank verifies DOTOR amount and actual furnishing done inside house?
Nilesh
No, Bank is not bothered about DOTOR. You may notarize the original copy and keep it with you for your reference. Bank will only demand Sale Agreement and Sale Deed copy.
Hi I am a small time builder and I allowed a customer to execute the sale deed of flat on circle rate as directed by the state govt.It was of half the amount of the agreed sale price.After the sale deed was executed the customer refused to execute the deed of transfer of rights and has dragged me to the court for the recovery of excess amount.If any builder is reading please be careful and insist that deed of transfer of rights is executed before the sale deed.
A DOTOR cannot be executed for under construction property. In this case, you should have executed 2 agreements with the buyer (a) Agreement to sell and (b) Agreement to build / Construction Agreement. An under construction property can be registered at the value as mentioned in Agreement to sell which is kept near to circle rate. Balance amount can be collected through construction agreement.
While the sale agreement is registered, the construction agreement is just documented on a Rs 200 stamp paper and and notarised, is that legally valid ? If only 50 % of the total sale consideration (as per circle rates) is shown during registration, how is the other half of the total sale consideration accounted by both the builder and buyer? Would the 50% of the total sale consideration be part of DOTOR. Also is there a need to refer to the DOTOR and the concerned amount in the Sale deed?
It depends on case to case basis. The practice shared by you is normal practice.
In case a builder is allowing a customer to execute the sale deed on circle rate then the builder should avoid mentioning that he has offered to sell the flat to customer on the x amont(x amount is the value of flat as per circle rate.)This line “offered to sell on x rate” becomes the most important when the court case is initiated.The sale deed supercedes the agreement to sell and the agreement to sell becomes irrelevant once the sale deed is executed.Moreover the builder cant backout as he is also one of the party to sale deed.So extra care and legal opinion should be taken by the builder while entertaining requests for execution of sale deed on circle rates.
I have answered this in trail comment.
sir, can you provide the format of DOTOR.
Please check following link
https://drive.google.com/file/d/0BzYgxNnKcwg3bWo3dnJFVE5zRWc/edit?usp=sharing
Hi Nitin! Thanks a lot for the useful information. I am buying a resale flat in Bangalore (2nd sale, semi-furnished, 4 years old) in Bangalore for 49 Lacs. I had signed & franked Agreement with the seller for 49 Lacs for which I had paid 0.1% stamp duty – i.e. 4900/- for the agreement franking via a DD favouring Sub-Registrar.
Since this is a resale furnished flat, I’m planning to use DOTR to show 9 Lacs.
The seller had spent close to 11-12 Lacs on modular kitchen, fittings, furnishings (wood work in rooms), silk curtains, bed, TV unit etc. We’re now planning to Register a Sale Deed of 40 Lacs and have a Deed of transfer or rights for 9 Lacs. Both of these are paid via cheque. And it will be notarized and signed by Lawyer as witness.
My questions are:
Do you foresee any issue due to the difference in Price in Sale Agreement and Sale Deed, esp. given that the Agreement was franked? In Sale Agreement, Furnitures, Fixtures were mentioned, but in Sale Deed, it is not mentioned. However, in DOTR, it is mentioned.
I’ve made the DOTR here: https://docs.google.com/document/d/1u8G9Ub9AhjzPhpBJjv53ceHRZGBb2Rhqojg8kqkdHfw/edit?usp=sharing based on the format you provided. I’ve some doubts on the amount to be mentioned at various places:
“That the PURCHASERS have purchased the said apartment unit for a consideration of Rs. 40,00,000/- (Rupees Forty Lacs only) and registered vide sale deed dated 26-Aug-2014 in the office of the Sub Registrar, Bangalore South Taluk, Bangalore.” Here, should it be 40 Lacs or 49 Lacs?
“In pursuance of the aforesaid mutual agreement and in consideration of payment of the total sale consideration of Rs.49,00,000/- (Rupees Forty Nine Lacs Only) from the Purchaser as follows. Payment Details 1 & 2. Total amounting to ….”. What should be the amounts here? Should it be 9 Lacs? What should be the payment details? This for the DOTR amount: 9Lacs, or for the entire consideration of 49 Lacs? You can actually go to the document and comment there
Hi Nitin – First of all, thank you v much for these wonderful and v informative articles. I have recently decided to purchase a property in Gurgaon and Agreement to Sale value is 1cr. The seller has not taken the offer of possession from the builder so effectively there is no furnishing in the house. Now, that I am purchasing this property, how can I benefit using DOTOR? Or is it not possible in this case? Appreciate if you could response ASAP as I am in the final stages of making payment and would need to talk to seller if I adopt DOTOR approach,
Hi Nitin – Hope to hear from you soon.
It is not possible to execute DOTOR in this case as the possession of property is still with builder.
Hi Nitin, I am selling a flat for 64 Lakh in Bangalore. The registered value will be 48 lakh. As per your article, can I make a deed for transfer of rights for Rs 16 lakh and accept the entire payment by cheque? The apartment is 3 years old and all internal furnishings have been done.
You can execute DOTOR of 16 lakh and accept payment through cheque. All the best.
Can it be done for a resale flat. As per sale deed, flat costs 72 lakhs. Is it possible to execute a deed of transfer of rights for 5 years old modular kitchen and 3 aircons which are 3 years old, at a very low total cost of 20,000/-. Whether undervaluing of items, which is mutually agreeable, can be an issue based on legal aspects.
Thanks in advance
Very much possible. The valuation depend on mutually agreeable price between buyer and a seller which can be high or low. Legally there is no issue on valuation part. I suggest you to execute DOTOR for lumpsum amount instead of providing breakup for each item.
Que :That the PURCHASERS have purchased the said apartment unit for a consideration of Rs. 40,00,000/- (Rupees Forty Lacs only) and
registered vide sale deed dated 26-Aug-2014 in the office of the Sub
Registrar, Bangalore South Taluk, Bangalore.” Here, should it be 40 Lacs
or 49 Lacs
Ans: You mention 40 lakhs
Que: In pursuance of the aforesaid mutual agreement and in consideration of payment of the total sale consideration of Rs.49,00,000/- (Rupees Forty Nine Lacs Only) from the Purchaser as follows. Payment Details 1 & 2. Total amounting to ….”. What should be the amounts here? Should it be 9 Lacs?
Ans: It will be 9 Lakhs
Thanks a lot! You helped us save huge amount of money on registration cost!
In Kerala is the Deed of Transfer of Right valid? Also is this Deed vaild on sale of vacant non-agricultural land in town area? Kindly reply at the earliest.
It is valid for flats or houses but not for vacant non-agricultural land.
Hi Nitin, I’ve a doubt. As a seller, I’ve decided to sell my Apartment for 50 Lacs and I’ve entered in to an sales agreement with my buyer. But the Property will be registered for 35 Lacs, which means I can execute a DOTOR for 15 Lacs post the legal transfer of my property to my Buyer and take a cheque payment for the same.
Would the amount I receive through DOTOR is taxable. If so, then how do I reduce my Tax Liability. Please help me in clarifying the same
Basically amount in DOTOR is cost of improvement which is deductible from capital gain. Since you are charging this amount to seller therefore you cannot claim it under cost of improvement. You can declare net amount i.e. (amount received – amount spent) on furnishing as income from other sources and pay tax as per tax slab.
Hi Nitin,
Your article is very useful. My question is in line with most of the questions here however I am trying to get your perspective from seller’s point of view.
I am selling my property at 80 lac. It comes under long term capital gain as it is more than 3 years old property.Based on inflection index value is around 70 lac.
Buyer wants to register it as per guidance value which comes to 55 lac.
Now, if I do dotor then 80 – 55 is almost 24 lac if I put this in other income bracket I have to pay tax @ 30% rate and also it is very tough to show furnishing of this much is done.
but instead of doing dotor, I go with sale agreement then my capital gain is 10 lac and my tax will be @ 20% which is very less.
Can I do this?
Satyajeet
Its a conflict of interest i.e. if you register property at full value then buyer has to pay higher stamp duty and your capital gain tax will be less. Alternatively, if you execute dotor then buyer will pay less stamp duty and your tax outflow will be high.
You may adopt any approach
I would like to know whether if DOTOR can be included in Home Loan? HDFC includes 80% loan including stamp duty registration, but my querry if i buy a resale flat at govt value 20 lacs and considering the flat being 10 yrs old, there is a rebate of 20%… which bring the stamp duty registration to 20% less of govt value. Now, my point is will the DOTOR if included in the agreement can give me 80% loan on 20 lacs?
DOTOR is stopgap arrangement and cannot be included in Home Loan. Home Loan is approved based on Sale Agreement value.
Hi Nitin,
I have executed a sale agreement for a resale flat of 66 lacs and paid 20% of this value to the seller. Rest 80% is to be financed by bank.
I have two questions:
1)
i)I am planning to register the property @ 47 lacs (Guidance Value + Car Parking). Can I create the fixture and furnishings deed for the rest of the amount i.e.19 lacks? Since I have already paid 20% to the seller and convinced my bank to issue me two DD’s (47 lacs + remaining of the 80%). Do you see a challenge or a problem in future since I have made all the transactions in white?
ii) What would be sale consideration value on the Sale Deed?
2)
i)If I plan to register the property @ 52.8 lacs, is it mandatory to create the fixture and furnishings deed for the rest of the amount i.e.13.2 lacks?
ii) What would be sale consideration value on the sale deed?
Regards,
Amit
1 (i) You can execute DOTOR of 19 lakhs for fittings and fixtures. I don’t foresee any problem
1 (ii) In sale deed you need to mention 47 Lakhs i.e. value at which you will register. At the same time also mention separate clause in sale deed that you are paying 19 lakhs to seller towards fittings, fixtures and furnishing.
2 (i) Not neccesary provided you have sale agreement of 66 lakhs
2 (ii) 52.8 Lakhs. Mention mention separate clause in sale deed that you are paying 13.2 lakhs to seller towards fittings, fixtures and furnishing.
Thank you Nitin.
Now since you’re asking me to include a separate clause for the rest of the amount as per your comments on 2 ii & 1 ii, why would sale consideration value be lower? Ultimately the sale consideration value is the total transaction value you’re doing with seller. Isn’t that violation of Stamp Duty Tax and Income Tax on property?
Its your choice. You can also register at full value
Hie dear could you tell me DOTOR is legal in bangalore while purchasing a flat
You may execute DOTOR in Bangalore.
Hi Nitin, It’s lovely to read the article and know so much about Property. I need some sugessition from u. For purchasing a plot from a oner what are the documents u should ask from the owner of the land for verification? Also Is HDFC home loan is good to go ahyead as it is providing the loan on the total value not the circle rate?
Thanks
Debmalaya
Hi Nitin, It’s lovely to read the article and know so much about
Property. I need some suggestion from u. For purchasing a plot from a
owner what are the documents u should ask from the owner of the land for
verification? Also Is HDFC home loan is good to go ahead as it is
providing the loan on the total value not the circle rate?
Thanks
Debmalaya
I have already answered this query.
Hi Nitin, It’s lovely to read the article and know so much about
Property. I need some suggestion from u. For purchasing a plot from a
owner what are the documents u should ask from the owner of the land for
verification? And in case of a empty plot what will be the good reason for deed of transfer of rights? Also Is HDFC home loan is good to go ahead as it is
providing the loan on the total value not the circle rate?
Thanks
Debmalaya
Hi Nitin The plot I am looking for is 60Lk. and the cash amount I will give is 12-15 Lk. And I have spoken to HDFC about the rest amount which they will approve, means 45 they will give as loan. So the plot will get registered on 45 Lk or it can be less? The circle rate is 38 LK?
HDFC will approve Home Loan based on Sale Agreement value. Max Loan amount can be 80% of (Sale Agreement Value + Stamp Duty + Registration Charges).
Dear Nitin,
I am availing HDFC NRI housing Loan from Tirunelveli. We made sale agreement for 62.5 lakhs , then decided to register for 50 lakhs, which is till 15 laks higher than guide line value. But they revised the final loan amount from 50 laks (80% of 62.5 laks) to 40 Lakhs( 80% of 50 lakhs). They are not considering stamp duty also.
Being an HFC, HDFC approve Home Loan based on sale agreement i.e. 62.5 lakh in your case and also include stamp duty and registration charges in total value of property.
In this case, it seems HDFC decided to consider total value of property as 50 lakh. One of the possibility is that internal valuation of property as per HDFC is 50 lakhs only therefore loan is approved based on 50 lakhs. You need to check exact reason for this change with HDFC. Now if property valuation is 50 lakhs then HDFC will not include stamp duty in Total value of property as they cannot go beyond 50 lakhs.
You cannot execute DOTOR for plot or land. You may avail loan from HDFC. For list of documents to buy land/plot, Please check my following post
https://www.nitinbhatia.in/real-estate/10-points-consider-buy-land/
Hi Nitin, thanks for the fast reply. Are you also in property consultation?
I do provide property consultation service. You may reach me at info@nitinbhatia.in
Hi Nitin, Is the DOTOR is taxable for the seller? How he can save the tax on DOTOR. I am planing for a resale floor for 65lk. And it is already furnished. a) In same agreement I will mention the register amount? or in the DOTOR I will mention.
b) The DOTOR is taxable for the seller? as he has spend the money for x…….
c) As the floor is 8-9 yrs old then can I save any money on Registration And Seller can save on tax?
Thanks
1. Seller can declare net amount i.e. (amount received through DOTOR – amount spent on furnishing) as income from other sources and pay tax as per tax slab.
2 In sale agreement, total amount will be mentioned…No need to mention break up
3. Yes, it is taxable
4. You can register at circle rate or guidance value
Dear Sir,
The above info. and the arrangement is very good and well thought of.
However, what is the option that is available for purchase of ‘Vacant plots’?
Eg: I am purchasing a vacant plot for Rs. 62 lakh (Market value), however, the Circle/guidance value is Rs. 30 lakh and assuming I get a loan of 75% on the basis of agreement value i.e., 75% of Rs.62 lakh = Rs. 46.5 lakh and I want to pay the remaining amount of Rs. 15.5 lakh (62 lakh-46.5 lakh) by cheque, under what arrangement can this be made, I understand from your article that DOTOR cannot be executed for vacant land.
Please let me know at the earliest.
Regards,
Shankar
Unfortunately DOTOR cannot be executed for Plot or Land transactions. You may sign sale agreement at 62 lakhs and sale deed at 30 lakhs. To hedge your risk, get sale agreement notarized.
Hi Sir,
In the reverse case i.e., if I am a seller of this vacant plot, what would be my sale consideration? Also, what options are available to show only Rs. 30 lakh as my sale consideration and remaining Rs. 32 lakh as something else out of total transaction value of Rs. 62 lakh.
If it was a flat or house, the difference of Rs. 32 lkah could have been shown as DOTOR charges received.
Regards,
Shankar
Sale consideration will be 62 lakhs.
Sir,
If I am the purchaser in the above case, I get the land registered for Rs.30 lakh )Cheque payment) and I pay the remaining amount of Rs. 32 Lakh (Rs. 62lakh – 30lakh) also by way of cheque, how to show the value of the land in my books of a/c?
i.e., will it be Rs. 30 lakh plus the stamp duty and registration charges or Rs. 62lakh plus stamp duty and registration charges?
Regards,
Shankar
Sir,
Awaiting your response on the above query.
Regards,
Shankar
62 lakhs + other charges.
I am planing to buy a resale Flat in mumbai worth Rs 1.25 crores
I want to save taxes on stampduty and registration.
I am planning to buy it after selling my 1)Flat for which i have 1 buyer plus 2) my savings and 3) Homeloan for which i have applied.
Now the Seller is asking for a downpayement for a confirmation.
Could you please help on how i should breakdown the amont to pay him (1.25 Cr) and what percentage should i mention with respect to the Black and white combination ?And while paying Black , can i have any proof for the same , anything like DOTOR as mentioned in your article ?
I have reverted through email. Pls check your mailbox for the details.
Hi Nitin,
Can you please send me format of DOTOR. Thanks
DOTOR format is available on payment of drafting charges. If you wish to buy the same, you can call me at +91 94 800 21000 or mail me at info@nitinbhatia.in for payment details.
Thank you for your very informative article. Could you please clarify the fol
My sister bought a flat in 2007 for 19 lakhs registered value and spent about 4 lakhs on interiors. A buyer is willing to pay 61 lakhs for it. But he wants to register it only for the guideline value of about 25 lakhs.
1. Can a DOTOR value be more than thregistered sale value?
2. The indexed cost is coming to about 43 lakhs!! How can I say there is a loss?
3. She is entitled to Long term capital gains @ 20% on sale. But if she shows DOTOR of 36 lakhs, she will have to pay a higher rate on income from other sources?
4. Does she actually have to show all the bills for the amount in DOTOR? She may have bills of about 3 lakhs or so,
Kindly advise on whats the best way out.
Thanks so much.
1. DOTOR value can be more than Registered value
2. Long capital loss can be booked against property
3. Thats correct, income from DOTOR will be taxed at marginal rate and will be clubbed in income from other sources
4. Not necessary. If all taxes are being paid, no need to worry.
Thank you v much for the clarifications.
Sir,
Is it legal to register a vacant plot for the Government Guidance value (say Rs. 15 lakh) and pay the seller a total of Rs. 30 lakh (All through cheques)?
Regards,
Srinivas
You can register at Govt Guidance Value. Its legal.
Sir,
As I understood from your article, people may do this for Flats and apartments by executing DOTOR, but how can this arrangement be done for vacant land?
What is the basis for this? Isn’t the Govt. losing out the revenue by this arrangement? What is the justification that the buyer can give to the state Revenue department?
Regards,
Srinivas
You cannot execute Deed of Transfer of Rights for land / plot purchase.
Sir,
What is the basis for this? Isn’t the Govt. losing out the revenue by this arrangement? What is the justification that the buyer can give to the state Revenue department?
Sir,
The above question relates to vacant land/plot.
As i mentioned Deed of transfer of rights cannot be executed for vacant land / plot. I agree its a loss for govt but Govt revise guidance value from time to time to keep it as close to market value as it can but it is not possible to eliminate this anomaly 100%.
Sir, I am in bangalore if I register my property on guidance value but I have paid seller more amount and that also in white. If I will go for dotor then what will be the tax consequences for seller and buyer.
Tax implications for both buyer and seller depend on case to case basis. There is no standard answer to this query. To answer this query, i need complete details of case which is personalized consultation on chargeable basis. You may check following link for more details
https://www.nitinbhatia.in/consultation/
Dear Sir,
Is there any way out when you are purchasing land at circle rate and actual cost is much more. How do you show this to make every money accountable. Will DOTR work.
Regards
Charit
DOTOR cannot be executed for Land deals.
Dear Mr.Nitin,
I am looking for a property worth 50L but the Landlord wants to register it at cirle rate which will be 20L for which he wants white and rest in black. How to go about it.
Can the apartment be shown as semifinished and take a workorder on third person name.
What should be document be like for giving workorder.
I don’t suggest any cash transaction for property deals. Its an offense and may land you in trouble.
You can sign sale agreement of 50 lakh, register at 20 lakh and execute Deed of Transfer of Rights for balance 30 lakhs.
Fine will follow the points suggested
Hi I am planning to purchase a plot. However when i look at the original deed, there is a court order stamp.
I enquired and receive the court order copy from the seller.
It was for a permanent injunction the seller filed against his brother to stop him from using the way to the plot.
It was ruled in favor of the seller.
Should I be concerned about this ? What if the his brother files an appeal ?
Should I get any affidavit from the seller ? If yes where can I get the format ?
You may ask blanket financial indemnity bond from seller for indefinite period in relation to this.You may seek help of local lawyer to draft the same. This bond should be executed in court.
His brother may appeal in higher court. You can decide whether you would like to take this risk or not.
Hi, Nitin
I need your advise in case of a joint owner of land.
One of the owner of land wants to develop the property and construct a building on the said land. In consideration he will give the flats to the the other owner.
What Procedure needs to be followed.
You need to sign Joint Development Agreement. If he is acting as developer / builder then he will sign twice on JDA i.e. once as a land owner and developer / builder separately.
Hello, I need Help, I am purchasing Apartment in Ahmadabad which is Resale property. 1st Agreement has been done was for 25 lac. and stamp duty is paid accordingly. Now I planing to buy that Apartment i am taking loan of 13 lac, and paying 3 lac. with cheque payment. rest i am paying in cash. My Question can we do new agreement of said flat with total amout of 16 lac rupees.??
You need to Ready Reckoner Rate.I will not suggest cash transaction. Govt / IT department can easily find out the same.
Hi nitin,
Their is a property on my mother name purchased at 90 thousand sale deed om 2002 now planning to sale it as per current circle rate it will be registered min. At 20 lacs. It is some how only kaccha wall boundary 1st floor with roof rights area of 70 sq yards though purchased 80 sq yrd at that time now demolished by govt. The margin of capital gains will be too high.
1. How margin of gains is calculated like after how many years.
2. How much tax it will cost us.
3. How can i save tax.
4. I have 1 more home on loan will it benefit me to save something.
5. We are not in very good financial conditions right now would not be able to pay heavy taxes whats the best solution.
S.samarjeetsingh@gmail.com
I need to check all documents to answer these queries.
Hi nitin, i am buying an appt in bangalore. The seller had bought from builder during construction but did not register it upon completion of construction. I have signed MoU with him and have applied for loan with hdfc based on this. Now that i will have to go for tripatriate agreement and sales deed will be made by builder, do i still have option of getting a dotor? Does hdfc ltd. accept it? Seller bought the appt for 50L and i am paying 70L to him.
Just to add, there is no furnishing done by seller. However, in his cost breakup from builder, there are other things like club house, maintenence, sinking fund, gas pipeline, etc.
It depends on case to case basis & your payment arrangement with builder and seller. Also how the home loan amount will be utilized. There is no universal rule. You need not declare execution of DOTOR to HDFC Ltd.
I am planning to buy an under-construction flat in Hyderabad, and when i suggested to builder to go for DOTOR route to save on stamp duty and registratio, he said that I will have to pay service tax at around 14% on the value of DOTOR.
1. Is this true? Or is this a tactics by builder to make people go for single template agreement and sale deed? If we need to pay service tax on DOTOR then how much and when?
2. When will DOTOR be made when preparing Sale DEED during final payment or when i pay the 20% downpayment and execute the sale agreement?
3. Would you have any contact for getting title search done in Hyderabad? Plz share at my email.
1. Service Tax is not applicable on DOTOR. Seems builder is referring to Work Order on which he can charge Service Tax
2. It is subjective. I need to check agreement and payment schedule to answer
3. To avoid conflict of interest, currently i am providing any references.
Thanks Nitin.
It got clear after reading another of your article. As this is under construction property it will be Work order on which he said I will need to pay Service Tax.
But as per your article I asked the builder to include some of the Important clauses in the Agreement Like cancellation/penalty in case of legal disputes on property. But He is refusing to do that saying that this agreement is a standard format which has been signed by other buyers as well. I want to include in Agreement that in case of delay of more than 6 months After grace period I would have the option to cancel the booking (based on future prospects) and builder will have to return the money with interest. Is this possible to be added in agreement?
You have to negotiate with the builder for the inclusion of clauses mentioned by you. Standard Agreement is vague term as it is drafted by the builder. Agreement is mutual and should address the concerns of both the parties.
Dear Nithin,
First of all its very appreciable of very valuable info regarding registration and stamp duty.
However i’m bewildered in my present situation :
I’m buying a plot in a outskirts of a town Mandanapalle in Andhrapradesh. Plot value is 15,30,000 and im planning to register next thursday (11 jun) for govt.rate or circle rate which is 3,00,000 . But there is no source of money for me now other than a loan from bank for construction.
can you please clarify me , whether banks provides loan based on my NRI Salary (1.5 lac permonth) or against property value.
If it is property value will they consider sale value 15.3 lacs or sale deed value that will be 3 lacs.
If it based on 3 lacs , it will be huge problem for me while construction.
Could you please let me know for how much amount i can register the plot to save stamp duty and at the same time to avail bank loan.
Also, please let me know any other tips that are useful while registration or avail of loan.
Thanks in advance.
Awaiting your reply.
Warm Regards,
Kishore
Please check following post
https://www.nitinbhatia.in/home-loan/home-loan-eligibility/
Dear Mr, Nitin,
I am in big trouble , I have taken a resale flat in Bangalore
, total cost of flat was 37 lakh,
I have paid 20% by bank transaction to
owner and rest money about 29 lakhs for hdfc loan, as the owner was not ready
for registration on total sale amount , so HDFC given me two checks one 25 lakhs
, as govt, rate of property , another 4 lakhs more.
Before registration
me and sealer both went for sale agreement of total amount 37 lakhs for which
sealer was agree. But during registration I have done registration and stamp
duty on circle rate 25 lakhs, all things done legal.
Now after one year
I got call from BBMB officials that , I have to deposit deference amount , as
the registration done on 25lkahs and agreement was on 37 lakh, and its found in
audit, if I will not do so , legal action will be taken against me and I have to
fill penalty.
Sir I am very offered, please help me what I do now, I
have not done any thing wrong. should I act on there phone call or it could be a call for asking bribe, as no any notice sent to me , the have given me a thread call if I will not meet them they will issue notice of penalty can the do this in this way.
please guide me.
Regards,
Sachin Saxena.
Ericsson Global
99458198949945819894
You can approach sub registrar office to check all the details. There is a mafia which is involved in black mailing. Best way is to visit sub registrar office and clarify. If there is any legitimate demand then pay. If these are fraudulent calls then register police complaint.
Mr. Nitin –
I am planning to buy a resale apartment at Pune for 42 lacs. The seller had purchased this apartment for 28 lacs.
The seller is insisting to mention onto the agreement a price which is as close as possible to 28 Lacs to save on taxes.
Can I do a sales agreement at a price of ~42 lacs & registration at a price close to 28 lacs & the remainder 14 lacs through DOTOR ?
Please suggest how the DOTOR would help in this case & would it be legal. Thanks in advance !
You can execute DOTOR but it will not help seller to save tax as such.
Dear Nitin,
We have a property in Delhi in my mother’s name and she wrote an unregistered Will on it. We want to get it registered. We are styiang in Maharashtra. My question is can we get the Will registered in Mumbai Sub Registrar Office or we need to go to Delhi for it?
You need to get it registered in Delhi.
Hi Nitin, I bought a flat in Pune and I executed Agreement to sale and deed of assignment/transfer. Both documents are signed and register in sub register office. So my question is now I am legal owner of flat? I have not executed sale deed so now I am legally owner of flat?
I have not seen documents therefore cannot comment but it seems that title of the property is transferred in your name.
Thank you for reply.
Is it executed after registering the Sale Deed… exactly when?
How the price break of balance amount to be shown on DOTOR? Just saying “towards the miscellaneous cost” is sufficient or price break by each component?
Is there any limit on the amount on DOTOR… like it can not be any more than some percent of the value mentioned on Sale Agreement / Sale Deed?
Immediately after sale deed is executed. DOTOR amount and other details depend on case to case basis. Objective is that executor should be able to justify the same.
Hi Nitinji,
I have few questions related to DOTOR. I am buying a resale flat in Bangalore and there are a few furnishing work done in the flat by the owner for which he does not have the bills. (eg, lights and electrical fittings, few bathroom fittings, few carpentry work etc).
1. Is it OK to include estimated cost of such items in the Deed of Transfer of Rights?
2. Can floor rise cost be included in DOTOR?
1. You may include
2. No
Hi Nithin, thanks for your very insightful article on DOTOR ! I am in the process of buying a resale apartment and the seller is an NRI who insist on everything through legal channel. On my side also, I am willing to pay entire amount through bank, but I was looking for a way to reduce registration cost. Looks like the DOTOR is the best option for both seller and buyer ! I have one doubt remaining – DOTOR has to be executed at the registrar office just like Sale Deed ? Or it is just a document to be signed by seller and buyer on a stamp paper ? May be the answer is already in the numerous comments below, appreciate if you can clarify this.
Your understanding is correct.