Noida Homebuyers Push Back Against Mandatory Stamp Duty on Sale Agreements

Noida property buyers challenge the new mandatory 6% stamp duty fee on sale agreements, calling it an unfair financial burden.

Buyers Object to Stamp Duty on Sale Agreements

Property buyers in Noida are voicing strong objections against the Uttar Pradesh government’s recent mandate, requiring a 6% stamp duty fee on the signing of sale agreements. Previously, stamp duty was only paid when the property was ready for possession and ownership could be officially transferred. However, the new directive requires payment at the agreement stage, which buyers argue is premature, especially given that the property is often not yet ready for use.

The move has led to widespread frustration, with buyers calling it an unjust financial burden. Anu Khan, president of the Noida Extension Flat Owners and Members Association, stated that the new rule only benefits the government by securing revenue early, while placing added costs on buyers. “Why should we pay the stamp duty in advance when delays in property handover are common?” Khan questioned. The association is planning protests against the measure.

New Rules Increase Financial Burden for Buyers

Previously, buyers would sign an unregistered sale agreement with developers, without paying stamp duty until the unit was completed. At that point, they would pay a 5% stamp duty fee as part of the registry process, which formally transfers ownership. However, under the new October directive, buyers must pay 5% of the total property cost as stamp duty at the time of signing the builder-buyer agreement, a step that also requires registration.

This mandatory stamp duty payment before project completion has been met with resistance, particularly as it introduces financial obligations early in the buying process. Buyers argue that this change disproportionately impacts them, as they must now invest more money without immediate returns or property ownership.

Government Justifies Rule for Buyer Protection

Uttar Pradesh Chief Secretary Manoj Kumar Singh defended the mandate, asserting that the change is intended to protect buyers. Singh cited cases where unregistered sale agreements allowed developers to sell the same property unit to multiple buyers. According to Singh, registering agreements and paying stamp duty upfront could help curb fraudulent sales and ensure that buyers’ interests are safeguarded.

However, not all officials agree on its implementation. Vandana Tripathi, Additional CEO of Noida Authority, emphasized that property sales in new projects will only be acknowledged if the buyer pays the 5-6% stamp duty. Otherwise, the transaction will not be recognized by the authorities.

Real Estate Industry Fears Negative Market Impact

The real estate community has also raised concerns. The Confederation of Real Estate Developers’ Associations of India (CREDAI) warns that the new requirement could dampen buyer sentiment and hurt the property market. CREDAI Secretary Dinesh Gupta argued that the rule change could disrupt the positive momentum in real estate. He urged the government to reconsider the directive, stating that it doesn’t benefit any party involved in the real estate sector.

In summary, while the Uttar Pradesh government maintains that the rule will protect buyers, homebuyers and developers alike are pushing back, questioning the financial strain it places on consumers. Whether the directive will remain in place or be modified due to the backlash remains to be seen.