The 30 × 50 plot and the 'gift' between cousins
A sale deed is presented for registration before the tehsil sub-registrar. The plot measures 30 ft by 50 ft in a municipal committee area. The notified collector rate for the locality is Rs 1,200 per square foot; the parties have declared Rs 800 per square foot on the ground that the plot is 'interior' and has no direct road access. The district fee schedule is: stamp duty 1% of value, registration fee 1% and capital value tax 2%, all computed on the value as determined. Where the declared value falls below the collector rate, the instrument must be referred to the collector of stamps, who determines the value at the collector rate and also imposes a penalty of 2% of the determined value. The seller and buyer are cousins; Rs 1,500,000 has in fact changed hands in cash, of which Rs 1,200,000 is stated in the deed. They now propose to record the transfer as a gift (hiba) instead, 'since no money is involved between relatives', and the buyer's agent offers the clerk Rs 30,000 to keep the declared value as it stands and to process the file the same day.
1. Compute the value of the plot and the total statutory charges on both the declared value and the collector rate, and state which figure the office is bound to apply.
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Area: 30 × 50 = 1,500 sq ft. Collector-rate value: 1,500 × 1,200 = Rs 1,800,000. Declared value: 1,500 × 800 = Rs 1,200,000 - 33.3% below the collector rate.
| Head | Rate | On Rs 1,800,000 | On Rs 1,200,000 |
|---|---|---|---|
| Stamp duty | 1% | 18,000 | 12,000 |
| Registration fee | 1% | 18,000 | 12,000 |
| CVT | 2% | 36,000 | 24,000 |
| Sub-total | 4% | 72,000 | 48,000 |
| Penalty | 2% of determined value | 36,000 | n/a |
| Total | 108,000 | 48,000 |
Conclusion: the deed cannot lawfully be registered at Rs 1,200,000. The instrument goes to the collector of stamps, value is determined at Rs 1,800,000, and the lawful cost is Rs 108,000 - Rs 60,000 more than the parties have budgeted. The arithmetic is not a bargaining position; it is the base figure against which any later audit of this file will be checked.
A useful cross-check for the desk: 4% of the determined value plus 2% penalty is 6% of Rs 1,800,000 = Rs 108,000.
2. Can the transfer lawfully be recorded as a gift to save the CVT? How should the Rs 30,000 offer be handled, and what may the parties lawfully do instead?
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Two separate problems, and both are criminal rather than procedural.
The 'gift'. A hiba is gratuitous: it needs declaration, acceptance and delivery of possession, and consideration is inconsistent with it. Here Rs 1,500,000 has already been paid. A deed reciting a gift while money has passed is a false recital; the substance is a sale and the charges follow substance, not the label. Recording it as a gift would expose the parties to proceedings under the stamp law for evasion, and the officer who attests it to departmental action.
The Rs 30,000. Accepting it is criminal misconduct; processing the file the same day in exchange is precisely the pattern an anti-corruption inquiry looks for first. Refuse, note the refusal in the file, and if the offer is repeated, report it in writing to the AC Revenue.
What they may lawfully do: contest the determination through the procedure the stamp law provides (reference/appeal to the prescribed authority), with evidence of a genuine defect - an access or encumbrance factor reflected in a notified reduction, or an independent valuation. What they may not do is understate the deed, split the transaction into instalments to reduce the base, or dress a sale as a gift. The correct words to the parties are short: 'The value is determined under the schedule. You may pay and contest the determination, but the deed will not be registered at a value the schedule does not permit.'
3. The buyer says he has only Rs 90,000 for all charges. Compute the shortfall and set out the lawful options, warning against the unlawful ones.
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Shortfall: Rs 108,000 − Rs 90,000 = Rs 18,000.
Lawful options:
- Reallocate between the parties. The incidence of stamp duty is a matter of contract even though deeds are conventionally drafted in the purchaser's name; a written agreement that the seller bears part of the charges, with the deed executed accordingly, is lawful.
- Reduce the subject matter, not the value. If the buyer genuinely cannot afford the whole plot now, he may buy a defined portion at its proportionate determined value; each deed is charged on its own value, so there is no saving in total, but the cash requirement falls.
- Defer the conveyance. An agreement to sell with possession arrangements can be executed now, with the sale deed registered when funds permit - but the parties must understand that possession without a registered conveyance carries its own risk.
- Pay and contest. Pay the lawful Rs 108,000, then challenge the determination through the prescribed reference/appeal.
Unlawful or futile options to refuse: understating the value (the reference to the collector of stamps is mandatory); splitting the deed into two to lower the slab (the total charge is the same and the intent is transparent); recording a gift (a false recital); or accepting the Rs 30,000. Any of these converts a fee problem into a criminal one, and the officer who permits it loses the file and the argument at the same moment.