Stamp duty cut stays a promise

Jain, who is pro-reduction recently even made a statement at a function that the state needs to reduce the stamp duty rate which is eight per cent of the agreement amount. But he told Express Newsline that he was helpless as stamp duty comes under the purview of the revemue department which is the portfolio of chief minister. He said that he had sent a proposal around six months back to the then Revenue minister Narayan Rane but no reponse was forthcoming. He added casually, “I don’t mind sending another letter now.”

Rather than benefit from reduced stamp dutyrates, flat purchasers have recently become suceptible to a new circular from the Stamp Duty authorities. Stamp duty now has to be paid on the basis of property rates prevalent at the time of executing the registration document with the authorities and not when the flat was purchased.

So even if the flat was bought in 1993 and the document is being registered this year, the current price will be taken into considertaion. The catch is that the Ready Reckoner-which lists the `real’ market value of real estate- is not on par with the drop in real estate prices (apart from the marginal five percent reduction mooted this year). Hence, many flat owners may end up paying more stamp duty says Vinod Sampat, president, co-operative Societies Residents’ Association.

There is yet another proposal in the offing likely to be introduced through the Indian Stamp Act soon, say sources. As per the proposal, if a stamp duty defaulter sells his flat, it will be the new owner who will be liable for it. “If this rule isenforced, a lot of people will be affected,”says Sampat.

Meanwhile, around six months back at a National Housing Policy conference in Delhi, the Centre had asked all states to reduce the stamp duty rates. Ram Jethmalani, the union Urban Development minister had declared that the stamp duty rates should be between three to five per cent of the agreement value, not more. The proposal was forwarded to Mantralaya. But senior officials in the Registration and Stamp Duty department argue that the centre’s demand is not justified. They state that Maharashtra has the lowest rate of stamp duty at eight per cent, while it goes upto even 12-15 per cent in other states. But they forget that property rates in Maharashtra, especially in Mumbai, are steeper when compared to other states and that revenue through stamp duty collection is the highest in this state.

Ever since the alliance government has come to power stamp duty collections have shot up substantially. The revenue through stamp duty had peaked at Rs 1800crore in 1996-97 while in 1997-98 it was over Rs 1600 crore. Mumbai alone contributes to 55 per cent of the collection inform officials.

The state had offered two amnesty schemes for stamp duty in two successive years. But the latest scheme which allowed flat purchasers to pay their stamp duty till March 31, 1999 by paying a nominal penalty of Rs 300 generated a poor response. Stamp Duty Officials opine that amnesty schemes are unfair to the honest tax payer and should be avoided. But the state government desperate to augment its income had implemented its second amnesty scheme within a short span of seven-eight months last December.

Meanwhile, citizen groups have started voicing their demands vociferously. Mahabaleshwar Morje, secretary of the Flat Owners’ Association, Mumbai has demanded that stamp duty should be abolished or reduced for purchases upto Rs 10 lakh in the city and upto Rs 5 lakh in the suburbs. He informed that it was the Sena-BJP alliance’s election promise five years ago to reduce stampduty and give consessions in registration fees.