Ease of Doing Business (EoDB) – Registering Property

The Ease of Doing Business (EoDB) index is a ranking system established by the World Bank Group. In the EODB index, ‘higher rankings’ (a lower numerical value) indicate better, usually simpler, regulations for businesses and stronger protections of property rights.

The research presents data for 190 economies and aggregates information from 10 areas of business regulation:

1. Starting a Business

2. Dealing with Construction Permits

3. Getting Electricity

4. Registering Property

5. Getting Credit

6. Protecting Minority Investors

7. Paying Taxes

8. Trading across Borders

9. Enforcing Contracts

10. Resolving Insolvency

INDIA – EASE OF DOING BUSINESS RANKING

Among the chosen 190 countries2, India ranked 63rd in Doing Business 2020: World Bank Report. In 2014, the Government of India launched an ambitious program of regulatory reforms aimed at making it easier to do business in India. The program represents a great deal of effort to create a more business-friendly environment.

India has jumped 14 places to rank 63rd out of 190 countries in the World Bank’s Doing Business 2020 report on account of the significant improvement in resolving insolvency and obtaining construction permits.

Rankings and weights on each of the mentioned parameters are used to develop an overall EoDB ranking. A high EoDB ranking means the regulatory environment is more conducive for starting and operating businesses. The Department for Promotion of Industry and Internal Trade (DPIIT), under the ministry, is also following reform activities in Kolkata and Bengaluru as these two cities are included by the World Bank this year besides Delhi and Mumbai for preparing the ease of doing business report, with a view to providing a holistic picture of the business environment in India, the official said.

The bank has added a new parameter of government contracting, taking the total area of the Business number of criteria to 11.

 The six parameters where the department is focusing are: enforcing contracts (163rd), resolving insolvency (52nd), starting a business (136th), registering property (154th), paying taxes (115th) and trading across borders (68th).

The efforts have yielded substantial results with India jumping 79 places in the Doing Business rankings since 2014.

Similarly, India still scores very low when it comes to registering property. The figure has barely improved to 154th, which is nothing to write home about. High stamp duty rates seem a perverse incentive to undervalue and underreport real estate transactions. There remains a host of rigidities in housing and real estate that need to be reformed to promptly do away with extensive opacity

Positive changes have led to this impressive improvement in India’s ranking in the EoDB index.

Registering Property in Ease of Doing Business (EoDB)

Doing Business records the full sequence of procedures necessary for a business (the buyer) to purchase a property from another business (the seller) and to transfer the property title to the buyer’s name so that the buyer can use the property as collateral in taking new loans to expand its business or, if necessary, sell the property to another business. It also measures the time and cost to complete each of these procedures. Doing Business also measures the quality of the land administration system in each economy. The quality of land administration index has five dimensions:

  • reliability of infrastructure,
  • transparency of information,
  • geographic coverage,
  • land dispute resolution,
  • equal access to property rights

Registered property rights are necessary to support investment, productivity and growth. Surveys, together with land registries, are tools used around the world to map, prove and secure property and use rights. These institutions are part of the land information system of an economy. With land and buildings accounting for between half and three-quarters of the wealth in most economies, having an up-to-date land information system clearly matters. Evidence from economies around the world suggests that property owners with registered titles are more likely to invest. They also have a better chance of getting credit when using their property as collateral

The benefits of land registration go beyond the private sector. For governments, having reliable, up-to-date information in cadastres and land registries is essential to correctly assess and collect tax revenue

To overcome this situation India’s major achievement in Registering Property for EoDB is summarized here:

Under the ‘registering property’ criterion, the focus would be on land titling legislation by all the four cities, land records to reflect actual ownership and timely disposal of property disputes.

♦ Introducing time limits

Time limits give the reference for how much time a procedure will take at most. If the procedure is not completed within that time limit then it creates hindrances and by considering this the Government of India comes up with the timeline for the different procedure involving

  • The time limit for Conduct a title search completed within 7 days by digitalizing 100% Land Records.
  • Payment of property tax can be done using e-payment instantly,
  • The charges search can be conducted online on the website of Ministry of Corporate Affairs without having any requirement for a physical visit to the Registrar of Companies. The Master Data portal provides company’s metadata, details of charges (asset undercharge, the charge amount, creation date, modification date, and status) and details of the directors (DIN/PAN, Name, Start date, End date) of the company. Additionally, the Index of Charges provides charge ID and charge holder name as well.
  • Stamp Duty Payment on the final Sale Deed through Franking is no longer applicable and shall be changed to ‘ePayment through eChallan or eSBTR.
  • Standard time taken for property registration is provided in the Citizen’s Charter

♦ Setting low fixed fees

Property transfer taxes are an important source of revenue for many governments. But when transfer fees and taxes are too burdensome, even registered property might quickly become informal if subsequent transactions are not registered. This not only weakens the protection of property rights. It also reduces potential revenue from property taxes.

♦ Streamlining procedures

Thirty-two economies streamlined procedures and linked or improved agencies’ systems to simplify property registration in the past 7 years. These measures reduced interactions between entrepreneurs and agencies—saving between 1 and 2 procedures on average—while maintaining security and controls

  • Online Single Portal for all Pre-registration checks and Property Registration
  • Digitized cadastral map for 6 rural areas are available in public domain
  • Central Government may consider amending the Act to provide for standard format instead of sale deed like many other countries in the interest of EODB for the time being the model sale deeds available in the editable format at the website of Department of Revenue for preparing their documents for property registration. They can do the same without having to consult any deed writer or advocate. This can be downloaded free of cost at the convenience of the home/office. The model sale deed simplifies the process, eliminates dependency on middlemen and other technical experts, and empowers the citizen to prepare the registration document on his/ her own. This document demystifies the legality involved in the document, reducing the cost of preparing the registration document from 1% of the property value to Zero.
  • Registration is not dependent on TDS and hence none of the SROs rejects the registration of any document in absence of TDS certificate Also, in case the citizens want the TDS certificate, it can be downloaded instantly. Payment of TDS is not a pre-condition for registration at the SRO office. Documents mandatorily required for registration at the SRO office may be accessed at (http://srams.delhi.gov.in/). The conveyance deed may simply mention that 1% TDS would be deposited with the income tax authorities. In case TDS has been paid prior to registration, the applicant has an option to mention the Challan number to the SRO
  • Introduction of e e-calculator to compute registration charges and stamp duty automatically Being developed by NIC.
  • GIS roll-out is mandatory for recording boundaries, checking plans and providing cadastral information.
  • For integrating with PAN, the field for seeding PAN exists in iSarita; once permission from income tax department is granted, integration can be done. Aadhar seeding facility is available in iSarita and it is integrated with UID Authority for verification; it is mandatory for e-Registration. For other registrations also, Aadhar can be seeded in iSarita. It can be made compulsory once the legal hurdles are over.
  • a project for the online mutation process and management of the Property Cards called “web-Property Card Information management System (Web-PC IS)” is under development stage for online management of urban property cards. The requirement for integration of the Central Registry of Securitization Asset Reconstruction and Security Interest of India (CERSAI) database with RoR shall be taken as a part of Web-PCIS.
  • Inter-connectivity between all the SROs may be developed for the registering SRO to access data from and transmit data to the SRO in whose jurisdiction the property is situated.

♦ Going electronic

In 60% of economies, the property registries have electronic files.15 Digital records have advantages over paper records. They take less space, and backup copies ensure that property records will not be compromised in the event of natural disasters or civil wars. Electronic systems also make errors and overlapping titles easier to spot. But this does not mean that paper registries cannot be efficient. Thailand had a very efficient manual system before going electronic. And having digital records is no assurance that an economy has a good system in place to manage this information.

1. All sub-registrar offices have been digitized and its records have been integrated with the Land Records Department, in both Delhi and Mumbai.

2. In Mumbai, all property tax records have been digitized. Property is mutated at automatically after registration. The digitization of property records ensures transparency and allows citizens to ascertain the history of transactions in digital mode.

3. Online service for charges search at Registrar of Companies reduces the time taken for this procedure significantly.

4. Statistics regarding the number of land disputes at Revenue Courts are available online in both Delhi and Mumbai.

♦ DATA NOTES ON REGISTERING PROPERTY

Doing Business records the full sequence of procedures necessary for business (buyer) to purchase a property from another business (seller) and to transfer the property title to the buyer’s name so that the buyer can use the property for expanding its business, use the property as collateral in taking new loans or, if necessary, sell the property to another business. The process starts with obtaining the necessary documents, such as a copy of the seller’s title if necessary, and conducting due diligence if required. The transaction is considered complete when it is opposable to third parties and when the buyer can use the property, use it as collateral for a bank loan or resell it

  • Integrated website to fetch data from Transaction deeds, Record of Rights, Property tax records (Mumbai city) and Revenue Court cases using Name-based search or Survey numbers
  • Steps have been initiated for online mutation of Land record of rural villages. For urban/constructed properties it will require integration of data pertaining to sub-registrars, revenue authorities and municipal authorities which is possible only if there is a survey of urban properties giving them a unique number and creating a titling system.

♦ Speedy Disposal of Land Dispute

  • The necessary amendment has been made by Gazette Notification no. 24(3) dated 11/04/2016 (Maharashtra Act No. X! of 2016) to mandate the adjudication of the cases disputes with regards to land within one year.
  • Registration Act has been amended with the insertion of Section 89 A, according to which every court shall send copies of an order affecting any immovable property and every recovery officer shall send copies of order or interim order attaching or releasing any immovable property to the concerned Sub-Registrar. The Sub Registrar will file such copies in his book and prepare the Index of such orders. During the search of a record of registered documents, the intended buyer will have knowledge of dispute or recovery proceedings if any.
  • Project “e-DISNIC Software” (Revenue Courts) for making the land dispute information available online has been rolled out across the State for Revenue Department (eDisnic.gov.in)
  • Land dispute details are now available online for Revenue Courts.
  • Grievance management system (a single-window service portal) has already been implemented by Government of Maharashtra called “Aaple Sarkar” portal.
  • Public Grievance Monitoring System (PGMS) is in a place where people can file their complaints I grievances. Revenue Grievances Monitoring System (RGMS) has also been put in place. A separate Public Grievance System software RGMS (Registration related Grievances Management System [http://rgms.delhi.gov.in]) has been developed for filing complaints about any grievance related to Sub-registrar Office (immovable property registration agency). Specific complaints on the services of SR offices Delhi can be made under RGMS. The system allows the citizen to select and describe the nature of the grievance and the SRO against the services of which it intends to file the complaint

♦ MEASURES UNDERWAY

The idea is to digitise and integrate all records relating to titles or encumbrances and make data available on a single portal in all over India. “As part of the exercise to reduce the number of procedures and time required, Officials are also working to create digitized land records, cadastral maps, municipal records and utility bills.”

There is a plan to register and map all privately held land plots and define timelines for changes in cadastral maps and obtain a record of rights under Public Service Delivery Guarantee Act to make it easier to register the property in the two cities, the official said.

To make it easier to register property, and the land resources department is in talks for complete cadastral mapping of all plots, timely disposal of property disputes, and making statistics of land disputes public. An integrated portal for verification of title and encumbrances and a simultaneous action plan to enact Land Titling Bills for all the four cities of Mumbai, Delhi, Kolkata and Bangalore, are also being considered.

This is part of the government’s action plan to make India break into top 50 in the World Bank’s annual Ease of Doing Business ranking, which ranks countries on the business environment based on ten parameters.

♦ CONCLUSION

The CS profession led by ICSI has a major task ahead of it in the rise of the Ease of Doing Business and the transformation that is happening. The right approach would be a leader in its domain area of governance, which not only lead the response to the transformations happening in the field of Ease of Doing Business but also shape the economic transformations in such a way that all the stakeholders benefit positively.

♦ REFERENCES:

  • https://dipp.gov.in/ease-of-doing-business-reforms/reforms-towards-ease-of-doing-business
  • http://www.makeinindia.com/eodb
  • https://economictimes.indiatimes.com/
  • https://www.doingbusiness.org/en/rankings
  • https://pib.gov.in/

(The author can also be reached at csviveksharma13@gmail.com)

Disclaimer: This article is based on the relevant information available in the above-mentioned websites and as per the information existing at the time of the preparation. This is only a knowledge sharing initiative and views, thoughts, opinion expressed are of my own. In no event, I should be held liable for any direct or indirect result from this article.

Author Bio

Qualification: CS
Company: Sharma Barai & Co LLP
Location: Chhattisgarh, IN
Member Since: 24 Apr 2020 | Total Posts: 1

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