Ensure your real estate transaction in India goes smoothly by understanding key regulations like RERA, stamp duty, GST, and tax implications. This guide provides you with crucial legal information, helping you navigate the rules that govern buying and selling property in India.
Navigating the legal landscape is a crucial part of buying or selling property in India. Understanding the rules and regulations will help you avoid legal hassles and ensure that your property transaction is legitimate. Here’s an in-depth look at the most important laws and regulations:
1. Real Estate (Regulation and Development) Act – RERA
RERA is a significant reform aimed at regulating the real estate sector in India. This act mandates that builders must register their projects with the Real Estate Regulatory Authority (RERA) and provide clear titles, deadlines, and pricing. It protects buyers from delays and ensures that projects are completed as promised.
2. Stamp Duty and Property Registration
Stamp duty is a state-specific tax imposed on property transactions. It is a critical legal requirement for property transfer and usually ranges between 5% and 7% of the market value. Additionally, property registration with the local sub-registrar is mandatory for transferring ownership from the seller to the buyer.
3. Title and Property Verification
Ensure the property has a clean title. A title search involves reviewing the chain of ownership to ensure no pending legal disputes, claims, or unpaid dues. This is essential to confirm that you are buying the property from the rightful owner.
4. Goods and Services Tax (GST) on Real Estate
For under-construction properties, GST is applicable on the transaction price. The standard rate is 12% for residential units that are not classified as affordable housing. Buyers of affordable homes may benefit from a reduced GST rate of 5%.
5. Income Tax Implications and Capital Gains Tax
When selling property, you must be aware of capital gains tax. If the property is sold within two years, it’s considered a short-term capital gain and taxed at 30%. If sold after two years, it qualifies as long-term capital gains and is taxed at 20%, with exemptions available for reinvestment in another property.
