Five things to keep in mind if you wish to transfer property in Uttar Pradesh to a family member

In a significant move aimed at promoting intra-family property transfers, the Uttar Pradesh government has limited the maximum stamp duty payable on a gift deed to Rs 5,000.

In a significant move aimed at promoting intra-family property transfers, the Uttar Pradesh government has limited the maximum stamp duty payable on a gift deed to Rs 5,000.

This reduction was earlier for six months from June 18, 2022. The government notification dated August 3, 2023, has extended the stamp duty reduction until further orders.

This will make restructuring and distributing immovable properties through family settlements easier and less complex since families would not be required to resort solely to a will, which is the preferred mode for passing on properties to children in order to avoid stamp duty implications. It is now possible to convey properties between family members without incurring heavy stamp duty.

What is the scope of this stamp duty reduction?

According to the notification, the reduction in stamp duty is applicable for transfer of immovable property in favour of family members that include father, mother, husband, wife, son, daughter, daughter-in-law (wife of son), son-in-law (husband of daughter), brother (or his wife in case of death of the brother), sister and son/daughter of son/daughter.

What is the difference between the stamp duty chargeable earlier and applicable now?

Before the reduction came into force, the stamp duty chargeable in Uttar Pradesh on transfer of a property between family members or outside blood relations attracted a stamp duty of 7 percent of the value of the property or 7 percent of the circle rate of such immovable property, whichever was higher. However, that has now been reduced to Rs 5,000.

Is this reduction applicable on all types of property?
The notification provides that the reduction of stamp duty is applicable on gift of residential and agricultural properties. It pertains exclusively to the gift of property between ‘real’ individuals. It does not apply to gifts involving ‘fictitious persons’ such as firms, companies, trusts and institutions, whether they are the donor or recipient of the gift.

A restriction has been imposed in case the property is received through a gift deed and subsequently gifted by the recipient within five years from the date of registration. In such instances, the property will not fall under the said notification.

What would be the effect of stamp duty reduction?

This reduction is expected to provide family members an opportunity to acquire property from their loved ones without the additional financial strain of stamp duty. This is particularly important for families with limited financial resources, as it will enable them to secure their future without unnecessary financial hurdles.

This also precludes court challenges and ugly family disputes that often accompany the transfer of property through a will.

Is the reduction applicable only on registration charges?

Even though the government has decided to reduce stamp duty for transfer of immovable property in favour of family members, registration fee of 1 percent will continue to be applicable based on the consideration or value calculated for stamp duty purposes, whichever is higher. Moreover, for certain areas such as Noida, permission will have to be obtained and applicable transfer charges would be required to be paid to the relevant authority before transfer of property can take place.