In India, land ownership is primarily established through a registered sale deed (a record of the property transaction between the buyer and seller). Other documents used to establish ownership include the record of rights (document with details of the property), property tax receipts, and survey documents. However, these documents are not a government guaranteed title to the property, but only a record of the transfer of property. During such transactions, the onus of checking past ownership records of a property is on the buyer. Therefore, land ownership in India, as determined by such sale deeds, is presumptive in nature, and subject to challenge.
Under the Registration Act, 1908, registration of property is not mandatory for all transactions. These include acquisition of land by the government, court decrees, land orders, heirship partitions, and property that is leased for less than one year. Since heirship partitions do not require registration, several property divisions are not recorded, and hence, do not correctly reflect who is in possession of the property. This often leads to litigation related to rightful owner among heirs.
The FSRC (2009) had observed that compulsory registration of lease-holds (where the property has been taken on lease from the state for a longer duration, typically 99 years) and title would provide protection to tenants. It had recommended that registration fees should be minimal and registration procedures should be simple, to not discourage people from registering property transfers. The Registration (Amendment) Bill, 2013, that is currently pending in Parliament, made registration compulsory irrespective of the term of the lease of the property.
While registering a property transaction, the buyer has to pay a registration fee along with stamp duty. The rates of registration and stamp duties vary across states. India used to have among the highest rates of stamp duty in the world. Around 2002-07, the stamp duty rates across states was between 12% and 15%. Note that stamp duties in other countries range between 1% and 4%. Further, stamp duty is calculated on the cost of the property, and in cases with high property values, could end up being a fairly big amount.
In addition to stamp duty, registration fee is an additional 0.5% to 2% on average. This raises the cost of property transactions, leading to people avoiding registering them. Since all registered documents on the transfer of property require the payment of stamp duty and registration fee, in several cases, people avoid getting heirship partitions or transfers within the family registered. Because of this, several such transfers do not get registered, and hence, records show outdated data. As mentioned above, heirship partitions do not require compulsory registration under the Registration Act, 1908. It may be noted that if heirship partitions required compulsory registration, they would attract stamp duty and registration fees as is required with all other property related transactions. This could act as a form of inheritance tax.
Under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), one of the mandatory state level reforms was to rationalise stamp duty and bring it down to less than 5% by 2018. Following this some states have reduced their stamp duties. For example, stamp duty in Delhi and Mumbai is 6% and 5%, respectively. The Standing Committee on Commerce on Ease of Doing Business (2015) had recommended that stamp duty should be reduced to 2%.
The FSRC had recommended that the Indian Stamp Act, 1899 and the Registration Act, 1908 should be amended to not require the payment of stamp duty for registration of certain property transactions. Further, the stamp duty rates should be reduced to reduce the cost of transactions.
States should reduce stamp duties from the present range of 15% to the level of three to five percent. Some states, such as Andhra Pradesh, Jharkhand, and Maharashtra have reduced stamp duties. The FSRC had also recommended to keep the stamp duty rates uniform across states.
However, reducing stamp duty would adversely affect the revenue of states, as it is a key source of income for the states. Currently, the percentage of tax revenue from stamp duty ranges from 16% in Maharashtra and Uttar Pradesh to 1-3% in the north-eastern states. The JNNURM guidelines had recommended that the reduction be carried out with adequate preparation and in a systematic manner. The loss in stamp duty revenues could be reduced if there is increased disclosure of property sales and the correct value of the property transacted. In order to ensure revenue neutrality, the FSRC had recommended to reduce stamp duty and increase land or property tax. Currently, land revenue contributes up to 5% of a state’s own tax revenue. Details on revenue from stamp duty, and other forms of land revenue for all states can be found in Table 8 in the Annexure.
Maintenance of land records
Land administration essentially involves recording, processing and dissemination of information about the ownership, value, and use of land. The system of land records management varies across states, depending on factors such as historical evolution and local traditions. Broadly, such information can be classified as details of the property (such as tax documents, rental documents), spatial records (such as maps, boundary limits), and transaction records (registered sale deeds).
Today, land ownership can be determined through a set of documents. These include: (i) the record of rights (RoR), which captures details such as the name of the land holder, the number and size of the plot area, and revenue rate (for agricultural land), (ii) the registered sale deed to prove that the property has been sold from one person to the other, and the taxes on the sale have been paid, (iii) survey documents to record a property’s boundaries and area, and prove that the property is listed in government records, and (iv) property tax receipts.
Typically, across states, these land records are stored and managed in the following manner:
Sale deed: At the time of purchase of an immovable property (land or property), both the seller and buyer sign a sale deed (a non-judicial stamp paper of a prescribed amount). Typically, a sale deed contains details of the property, market price of the property, and details of past transactions on the property. The sale deed is registered under the Registration Act, 1908. It is registered on a stamp paper, and the value of the stamp paper is known as stamp duty.
Once the deed is registered, details about the transaction are sent to the tehsil/taluka office to start the process of mutation (recording the transfer or change of title of a property in the land records) and reflect this change in the record of rights. Once the mutation/transfer comes into effect, the state government (through the tehsil/taluka office) provides documentary evidence of right over land in the form of a patta. This patta is then provided to the buyer as an evidence of land right.
The sale deed only captures information on the transfer of ownership, and few property details such as the area and cost of land. Other information related to land, property records, and related transactions is collected and maintained across various documents. These include:
Record of Rights (RoR): The RoR is the primary record that shows how rights on land are derived for the land owner, and records the property’s transactions from time to time. The structure of the document, and the information it provides differs across states. Typically, it provides (i) names of all persons who have acquired some rights with regard to the land, (ii) the nature and limits of their rights, and (iii) the rent or revenue to be paid by them. These rights could be ownership, long-term lease-holds, or tenancy related. The RoR may also capture information regarding loans taken by the occupant, details on the rights of the owner or occupant of the land, and any community or government rights on the land.
Spatial land records: Spatial land records contain details of a property sketched on a map. These include land boundaries, plot area, connectivity with roads, presence of water bodies, details of surrounding areas, land use (agricultural, residential, commercial, etc), and land topology. The property-level sketch must be updated every time a new entry is made in the RoR document. Periodic surveys by the Survey and Settlement department are used to update these spatial land records.
Historically, land registration, and the maintenance of records has been done manually. Documents are usually kept with the Revenue Department and are not easily accessible to the public. This makes it difficult and cumbersome to access land related data when trying to engage in a property sale. An individual has to go back several years of documents, including manual records, to find any ownership claims on a piece of property. Such a process is inefficient and causes time delays. While programs to digitise land records have been around since late 1980s, the progress has been slow due to the large volume of land records (for details see page 10). The Committee on State Agrarian Relations and the Unfinished Task of Land Reforms (2009) observed that the average age of village/cadastral maps in most states is more than 50 years, and most of them were prepared during the British regime.
The FSRC (2009) had recommended providing remote and easy access to registration procedures and to land records. It had noted that the use of internet kiosks to access land records had proved very useful in increasing transactions in states where it had been tried, such as Andhra Pradesh. In addition, it was suggested that online documentation of land records can be linked with court registries of the corresponding district or the state, through which a buyer can get immediate information of any pending litigations with regard to a property.
Poor maintenance of land records has also led to inaccuracy in them. In the past, states have neglected updating the records through surveys. Maps have not been used to establish actual boundaries on the ground. This has resulted in the spatial records not matching textual records. The discrepancy between spatial and textual records also arises because transfer and partition of land, either through inheritance or sale are not captured through surveys. For example, when a property owner dies, records may not be updated when land is transferred to the heir.
The FSRC (2009) had suggested that there was a need to integrate cadastral maps with textual data in order to ensure that complete information in relation to a land parcel is available and updated at the time of registration and subsequent mutation/transfer. It noted that cadastral maps are mostly limited to agricultural land, with the inhabited portions of villages largely remaining unsurveyed. Further, the agricultural land surveys are outdated. It also noted that while complete cadastral mapping can be a huge expense for states, India has not yet taken complete advantage of the modern low cost technology available in surveying and mapping. It had recommended that a low cost method could be to combine satellite imagery with existing village maps and other readily available spatial products.
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(Sourced From: Analytical Reports of PRS India – https://www.prsindia.org/policy/discussion-papers/land- records-and-titles-india