BHUBANESWAR: Real estate developers have sought the abolition of stamp duty, while entering into agreements with land owners to execute various projects.
Though such a provision exists in the state since 2003, it was practically not affecting builders, as most of them never registered with such agreements. However, after banks recently started insisting on registration of such agreements before sanctioning loans, builders have now become jittery.
While the Confederation of Real Estate Developers Association of India (Credai) state unit has submitted a memorandum to revenue minister S N Patro recently, the Real Estate Developers Association (Reda) of Odisha is planning to make a similar representation soon.
"The government is taking stamp duty twice in case of real estate projects. First, when the builder signs an agreement with the land owner to construct a project. Second, when individual buyers purchase houses from the developer. This duplication should be avoided," said Reda president Pradipta Biswasroy.
According to the Indian Stamp (Orissa Amendment) Act, 2001, as amended in 2003, an agreement to sell any immovable property or power of attorney shall be deemed to be sold and stamp duty will be chargeable just like in conveyance deed. Odisha charges stamp duty at the rate of seven per cent.
The act was not affecting the builders till recently when neither the government nor the housing loan providers insisted on registration of such agreements. However, after the Comptroller and Auditor General (CAG) pointed out in 2011 that the government was losing out revenue on non-registration of such agreements, government authorities tightened enforcement. Some banks, including biggest lender State Bank of India (SBI), have made registered agreements pre-condition for giving housing loans, forcing builders to register such agreements.
"We are not against registration, which is required to avoid future differences between the builder and land owner. However, full stamp duty like in case of sale is escalating project costs manifold. The government should change the stamp duty act to charge a nominal amount for such deals to boost the housing sector," said Credai joint secretary D S Tripathy.
A senior officer said the government is examining the matter vis-a-vis provisions in other states. In neighbouring states such as Chhattisgarh and West Bengal, payment of stamp duty is not required in case of such agreements and power of attorney and the government charges a fixed amount.