Immovable Property Contracts and the IT Act: The 2022 First Schedule Change

Until October 2022, the First Schedule of the IT Act excluded 'any contract for the sale or conveyance of immovable property or any interest in such property'. The notification S.O. 4720(E) omitted that entry. The change is often misread as permitting online sale of land. It does not: it removes the IT Act's own bar, but the Transfer of Property Act, the Registration Act and stamp laws still govern how title to immovable property passes. This note explains the former exclusion, what the omission changed, what it left untouched, how it affects common property documents, and how property registration is moving towards electronic processes.

1. Unlocking One Door in a Corridor

Picture a corridor with several locked doors between a buyer and ownership of a house. The first door, the IT Act's exclusion, stopped electronic property contracts from being recognised at all. In 2022 that door was unlocked. But the next doors, the stamp office and the Sub-Registrar's counter, are still there, and title passes only once the buyer walks through them. Unlocking the first door makes the journey easier; it does not remove the others.

2. The Former Exclusion

• Text. Section 1(4)(e) as enacted in 2000, and entry 5 of the First Schedule from 2009: 'Any contract for the sale or conveyance of immovable property or any interest in such property'.
• Scope. Wide enough to cover agreements to sell, sale deeds, and arguably any contract creating or transferring an interest in immovable property, such as mortgages and leases.
• Rationale. Immovable property is usually the most valuable asset a person owns; its transfer requires registration and stamp duty; and fraud in land records is common. Lawmakers in 2000 did not want electronic records to disturb these safeguards.
• Effect in practice. Sections 4, 5 and 10A could not be invoked to validate an electronic property contract, and banks insisted on wet-ink signatures on property-related loan and security documents.
• An important nuance. Even before 2022, the exclusion did not make an electronically agreed property deal void. The Contract Act does not require an agreement to sell to be in writing, so a contract formed through emails could still be proved as a contract. What was lost was the IT Act's deeming of electronic records as writing and e-signatures as signatures, which mattered wherever another law demanded writing or signature.

3. The 2022 Omission

• Notification. S.O. 4720(E), dated 26 September 2022 and published on 6 October 2022, issued under the proviso to Section 1(4)
• Change. Entry 5 was omitted altogether, not merely qualified.
• Reason. The same notification carved out promissory notes, bills of exchange and powers of attorney involving regulated financial entities. Together these changes were aimed at allowing banks, housing finance companies and other lenders to execute loan and security documentation, much of which relates to property, fully online.

Figure 1: Property contracts before and after the 2022 notification

4. What the Omission Did Not Change

Figure 2: The steps from agreement to title

• Transfer of Property Act, 1882. Sale of tangible immovable property of value ₹100 or more can be made only by a registered instrument (s.54); a simple mortgage, and most mortgages securing ₹100 or more, require a registered instrument (s.59); leases from year to year or for more than a year require a registered instrument (s.107); and gifts of immovable property require a registered instrument attested by two witnesses (s.123)
• Registration Act, 1908. Section 17 lists documents requiring compulsory registration; Section 32 requires presentation by the executant or a representative or authorised agent; Section 34 requires the executants to appear before the registering officer; and Section 49 makes an unregistered document ineffective to transfer the property, though it may be used as evidence of a contract in a suit for specific performance or of a collateral transaction.
• Part performance. Since 2001, a contract relied on for protection under Section 53A of the Transfer of Property Act must be registered (s.17(1A) Registration Act)
• Stamp law. State stamp statutes continue to apply. E-stamping allows stamp duty to be paid electronically, and some States accept e-stamps on e-signed documents, but the duty must still be paid.
• Supreme Court. In Suraj Lamp and Industries (P) Ltd. v. State of Haryana, (2012) 1 SCC 656, decided in 2011, the Court held that immovable property can be legally transferred only by a registered deed of conveyance; sale agreements, general powers of attorney and wills do not transfer title.

5. Effect on Common Property Documents

Figure 3: What can and cannot be done electronically

• Agreement to sell. Can now be executed with e-signatures and given the IT Act's recognition. It creates contractual rights but does not transfer title, and if the parties wish to rely on part performance it must be registered.
• Loan and security documents. Property-backed loans can be documented electronically, including facility agreements, undertakings and, with the other 2022 changes, demand promissory notes and powers of attorney in favour of the lender.
• Mortgage by deposit of title deeds. An equitable mortgage under Section 58(f) of the Transfer of Property Act is created by delivering title deeds with intent to create security; the deposit itself needs no registration. A memorandum that merely records a completed deposit need not be registered, but one that itself embodies the terms of the mortgage requires registration (Rachpal Maharaj v. Bhagwandas Daruka, AIR 1950 SC 272). Such memoranda may now be executed electronically, subject to stamp and registration requirements.
• Registered mortgages, leases and sale deeds. The instrument may be prepared and signed electronically as far as the IT Act is concerned, but registration and its formalities continue.
• Trusts and wills of immovable property. Still excluded by entries 3 and 4 of the First Schedule.

6. The Road to Electronic Registration

Figure 4: Milestones and the leading case

• State initiatives. Several States have introduced e-stamping, online document preparation, slot booking, Aadhaar-based authentication of parties and, for some documents such as leave and licence agreements, online registration.
• Draft Registration Bill, 2025. In May 2025 the Department of Land Resources released for public consultation a draft Registration Bill to replace the Registration Act, 1908 with an online, paperless registration system. It had not been enacted at the time of writing.
• Where the IT Act fits. Once registration law permits electronic presentation and registration, the 2022 omission ensures the IT Act does not stand in the way: electronic records and signatures will satisfy writing and signature requirements for property contracts.

7. Quick Revision and Memory Aids

• 'One door unlocked, others remain'. The 2022 omission and the remaining formalities.
• 'Entry 5 omitted, S.O. 4720(E), 2022'. The change.
• '54 sale, 59 mortgage, 107 lease, 123 gift'. TPA sections requiring registered instruments.
• '17 lists, 32 presents, 34 appears, 49 penalises'. Registration Act sections.
• 'Suraj Lamp: no title without registration'. The leading case.
• 'Rachpal: memorandum that is the bargain needs registration'. Title deed deposits.

8. Frequently Asked Questions

What did the 2022 amendment change for immovable property?

It omitted entry 5 of the First Schedule, so the IT Act now applies to contracts for the sale or conveyance of immovable property or any interest in it, and electronic records and e-signatures can satisfy writing and signature requirements for such contracts.

Can a sale deed now be executed and registered online?

The IT Act no longer prevents electronic execution, but title passes only by a registered instrument, and registration follows the Registration Act, 1908 and State rules, which in most States still require physical presentation and appearance. A draft Registration Bill, 2025 proposes a paperless system.

9. Related Topics

• Topic 32: Section 1 and the First Schedule. The complete note on exclusions.
• Topic 34: First Schedule Before and After 2022. Side-by-side comparison.