What is the step by step process for buying property in India?

This answer is more relevant to Bangalore's location.

We break down the buying process into 8 steps. Listed below,

1. Introduction

2. Document verification

3. Sale agreement drafting & execution

4. Home loan

5. TDS

6. Stamp duty & registration charges

7. Sale deed drafting & execution

8. After-sale deed registration

Below is the step by step description for buying a property.

Step 1: Introduction (between buyer & seller)

Even when the buyer and seller have agreed on the deal, they are typically always on the back foot and are equally anxious about the outcome and the next steps to take forward.

There is always a lingering feeling that the other party may back out or provide unpleasant surprise So, it is crucial that buyer & seller agree to the terms, conditions, and timelines of the sale without leaving any loose ends so that no disputes arise later. Both the buyer and seller have their legitimate concerns - and these have to be addressed judiciously. That is exactly what the sale agreement is drafted and executed.

Step 2: Document verification :

Generally, properties are bought under two circumstances. They are,

• Under construction property

• Ready to move-in property (Either new or resale property)

Especially we have to be more conscious when we book under-construction property because you have more to verify, right from land document to possession letter.

Never ever initiate the booking transaction unless the documents are verified. Some unprofessional sellers may not support document verification unless the booking amount is paid. Avoid such seller or be strong on your stand to verify the document before initiating the transaction.

Here is the list of few important documents to verify

• Mother deed

• Sale deed

• Encumbrance certificate (EC)

• Khata certificate & extract

• Latest tax paid receipt

• RTC Extract

• Building approval plan (For Bangalore, BIAPPA/BDA approval)

• No objection certificate from bank if property bought on loan (NOC)

• No objection certificate from association/ society office / Maintenance office (NOC)

• Latest utility bills - electricity and water

• Aadhar of seller

• Family tree and death certificate if the property was inherited

• General Power of Attorney / Power of attorney/ Special power of attorney, if applicable

Step 3: Sale agreement drafting & execution:

“Agreement for sale”, popularly know as sale agreement. It is a judicial promissory note to sell the property in further date under the terms & conditions mentioned in the agreement.

It is a legally binding agreement and helps to build complete trust between buyer & seller to accomplish an ownership transfer without any hassle.

Documents require to draft a sale agreement,

• Absolute Sale deed of seller

• Khata certificate & extract

• Latest tax paid receipt

• Encumbrance certificate (EC)

Below is the list of few important clauses to be in sale agreement.

• The date on which the sale agreement is being executed

• Name, Father/Husband’s Name, Age, Address and PAN card details of the Vendor(s) and Purchaser(s)

• Schedule of the property

• Title flow of the property

• Total sale consideration, i.e. the total sale value

• Advance payment, balance payment & mode of payment

• Timeline for completing the transaction, i.e. registering the sale deed

• Vendor obligations

• Non-solicitation by Vendor

• Dispute handling mechanism

• Default, exit, and penalty clause

• Schedule

In general, a sale agreement has 3 sub-schedules. For example, Schedule A, Schedule B, and Schedule C

Schedule A: refers to a large portion of the project. probably measured in acres

Schedule B: refer to the exact unit of the project. Measurement of your flat size in sq.ft or sq/mt.

Schedule C: refer to the undivided land share. Measure in sq.ft or sq/mt.

As per the Karnataka Stamp Act, the stamp duty for sale agreement is 0.1% of consideration value.

For example purchase value Is Rs. 50 Lakh. Stamp duty is Rs.50,00,000 X 0.1% = 5,000/-

Stamp duty paid is Rs. 5,000/- in the mode of e-stamp paper or franked at the sub-register office by making the payment in the mode of DD.

Note: sale agreement stamp duty can be offset at the time of sale deed registration. Offset is applicable only if you choose franking mode. Offset is not applicable to e-stamping.

The minimum stamp duty is Rs. 200 to the max is Rs. 20,000.

Both buyer and seller must sign sale agreement. Must sign at the bottom of all pages and execution pages. Two witnesses have to sign at the execution page.

Step 4: Home Loan:

Step by step procedure for home loan process

• Eligibility Check

• Pre Approval loan letter from a bank

• Execute the sale agreement

• Submit your personal documents (Passport size photo, PAN, Aadhar, 6-month bank statement, salary slip, IT return for the last two year.

• Fill the home loan application

• Submit Property Documents

• Home Loan Sanction

• Preparing the Sale Deed

• Home Loan Disbursement

Step 5. TDS:

From June 1st, 2013, when a buyer buys immovable property (i.e. a building or part of a building or any land other than agricultural land) costing more than ₹ 50 lakhs, he has to deduct TDS when he pays the seller. This has been laid out in Section 194-IA of the Income Tax Act.

Here are the requirements of this section:

• The buyer has to deduct TDS at 1% of the total sale consideration. Note that the buyer is required to deduct TDS, not the seller.

• No TDS is deducted if sale consideration is less than ₹ 50 lakhs. If installments are being paid, TDS has to be deducted on each installment.

• Tax is to be paid on the entire sale amount. For example, if you have bought a house at ₹ 55 lakh, you have to pay tax on ₹ 55 lakh and not on ₹ 5 lakh (i.e. ₹ 55 lakh – ₹ 50lakh). This is applicable even when there is more than 1 buyer or seller.

• If you are the buyer, you do not need to obtain a TAN (Tax Deduction Account Number) number.

• If you are the seller, you have to provide your PAN or else TDS is deducted at 20%. PAN of the buyer is also mandatory. TDS is deducted at the time of payment or at the time of giving credit to the seller, whichever is earlier.

• This TDS has to be deposited along with Form 26QB within 7 days from the end of the month on which TDS was deducted.

• After depositing TDS to the government, the buyer is required to furnish the TDS certificate to the seller. This is available around 10-15 days after depositing the TDS.

• Thus for paying TDS, the seller is required to obtain Form 16B and the buyer is required to obtain Form 26QB.

Step 6: Stamp duty & Registration charges:

Below is the list of charges in Bangalore.

• Stamp duty: 5% of consideration value

• Registration charge: 1% of consideration value

• Chess : 0.5% of consideration value.

The stamp duty & registration charge calculation goes as below

The Consideration value is Rs. 80 Lakh,

• Stamp duty : 80,00,000*5% = Rs. 4,00,000/- (DD on the name of respective sub-register office)

• Registration charge : 80,00,000*1% = Rs.80,000/- (DD on the name of respective sub-register office)

• Cess : 80,00,000*0.5% = Rs.40000/- (DD on the name of respective sub-register office)

Note: stamp duty, registration charge, and cess are based on consideration value or market value. whichever is higher. The intention of market value is to avoid the underpayment of stamp duty and registration charge.

Step 7: Sale deed drafting & registration:

The sale deed is a legal document that contains details of transfer of property ownership from a seller to a Buyer. This is one of the most valuable legal documents while purchasing or selling a property. It is executed at the time of actual transfer of property ownership at a sub-registrar’s office. This document needs to be registered mandatorily and is governed by the Registration Act.

It is usually drafted as a continuation of the sale agreement. All the terms and conditions mentioned in the former would be fulfilled and observed in a deed of sale. A sale deed is also otherwise known as conveyance deed. It is also proof that the buyer is the absolute owner of the said property.

• Clauses must-have in a sale deed draft are,

• The date on which sale deed is being executed

• Name, Father/Husband’s Name, Age, Address and PAN card details of the Vendor(s) and Purchaser(s)

• Schedule of the property

• Title flow of the property

• Total sale consideration i.e. total sale value

• Mode of payment & Transaction numbers

• Vendor obligations and declarations

• Indemnification by vendor

• Non-solicitation by Vendor

• TDS details

• Schedule

Documents require to draft sale deed:

• Seller sale deed

• Current year khata certificate & extract

• Current year tax paid receipt

• Current year encumbrance certificate

Print the sale deed draft on document paper (bond paper). Print one side of the paper, avoid back to back printing.

Decide the respective sub-register office to register the property. On the day of property registration, carry the following documents to sub-register office.

• Printed sale deed

• Executed sale agreement along with its stamp duty paid receipt

• Current year tax paid receipt

• Current year’s khatha certificate and khatha extract

• Aadhar (Linking of mobile number is mandatory for digital signing - Digital signing at registration is easy and convenient)

The buyer and seller should sign at all pages of sale deed. Two witnesses have to sign at the witness section.

Step 8: After the registration:

• Get the encumbrance certificate printout immediately after the registration. Buyer name should reflect in new encumbrance certificate

• If the property bought on loan, take the photocopy of sale deed and get true copy attestation from an advocate before handing the sale deed to bank. You may not get access to the original sale deed until the loan is cleared.

• Meanwhile, true copy attestation helps to proceed for property tax application, khata transfer application, and name change in utility bills.

This completes the step by step procedure for buying a property.

We provide the following services, to opt for our service, please WhatsApp to 9 7 4 2 4 7 9 0 2 0.

• Document verification

• Sale agreement drafting & execution

• Sale deed drafting & execution

Thank you for reading…