The original sale deed and a photocopy are produced before the district sub-registrar at the district-level, and the sub-registrar at the tehsil level, for registration. The clerk compares the photocopy with the original and attaches a certificate. The purchaser then deposits the registration fee (2 percent of the value of the transaction) and is expected to collect the registered document at a later date. However, such registration is voluntary and the validity of the sale deed is not the concern of the registering officer. It is estimated that about 10 percent of all registrations are illegal, in which government land or land belonging to someone other than the vendor is sold to unsuspecting purchasers. Such cases tend to he in urban areas where information asymmetries are high. In the rural areas, land is almost always inva1 jably bought and sold within a village in which people know each other<sup>20</sup> .

The value of the property sold/purchased is verified (from a valuation register) at the time of registration to ascertain that it is not below the current market price. The highest value at which a particular type of property in a particular area is registered in the last three years constitutes the present market value of that property. This verification is necessary to prevent under-valuation, and thereby depresses the future 'market' rate<sup>2</sup> 1.

Other activities of the sub-registrar's office include: _Preservation of document copies:_ Four types of registers are maintained at the registration offices: Book 1 contains the certified photocopies of documents relating to immovable property. Book 3 is concerned with wills. Book 4 consists of documents dealing with the power of attorney, adoption of movable assets, etc. Book 2 records all transactions that are disallowed by the registrar's office, for example, in the event that one of the parties is a minor, stamp duties and registration fees have not been paid, or the transaction falls outside the jurisdiction of the Indian Stamp Act, 1899.

_Issue of encumbrance certificates:_ Persons keen to know encumbrances on a property over a given period of time provide details of the property and the period for which information is required, and deposit the fee for the search and preparation of the certificate. On receiving the request, the clerk searches the Index II register of the village in which the property is located for the required period.

_Issue of certified copies:_ Persons requiring a certified copy of a document have to deposit search, inspection and copying fees. Search is done on the Index register from which the preserved photocopy of the document is located and copied manually onto stamp paper.

_Back office activities:_ These include preparation of: (i) Indexes I and II to help search for the information for issuing encumbrance certificates and certified copies, (ii) valuation register which records information, for every village, on date of registration, area and type of land, and its value, (iii) fee book which maintains records of different types of fees collected such as registration fee, search fee, inspection fee, copying fee, and miscellaneous fee like marriage fee and petition fee, and (iv) the monthly receipt and expenditure statement.

Stamp duty and registration fees are important sources of revenue for the state government. In 1988-89 (the last year for which comparative data are available), income from stamp duty and registration fees together constituted 6 percent of the state's revenue (Table 3). While its relative contribution to total state income has declined from 10 percent in 1958-59, in absolute terms stamp duty and registration fees contributed nearly Rs.600 million to state income from various sources in 1997-98 (Table 5). This figure, however, does not

- 20 It is customary for the purchaser to invite the seller for a meal which can typically cost Rs. 500.

- 21 Gift transfers avoid stamp duty. So if land is being transferred between brothers, they would prefer to show it as a gift rather than as a sale to evade stamp duty. No stamp duty is payable in inheritance cases.

29