Stamp duty hike move irks realtors
Nov 12, 2013
Source : The Times of India
BHUBANESWAR: The state government's decision to amend the Indian Stamp Act has drawn flak from real estate developers and builders, who say it would lead to 'double taxation'.

On October 10, the state cabinet acquiesced to a revenue department proposal to amend the law on the ground that it would stop evasion of stamp duty and minimize the role of intermediaries. An official note said a number of transactions of land are being 'disguised' as power of attorney (PoA) of agreement to sell, resulting in evasion of stamp duty. Hence, the execution of PoA needs to be treated as conveyance, which means stamp duty shall be payable on the instrument on the basis of the market value of property concerned barring when it is between family members.

This, however, could hit the buyers, argue builders. "Now when a developer would plan a project through a joint venture, he will pay stamp duty after the agreement with land owner. The buyers will have to pay stamp duty for registration of their individual properties. This way, the government would collect stamp duty twice for the same property and the end user will bear the burden since the developer will factor it in the project cost," explained president, Real Estate Developers Association (Reda) P K Biswasroy. While in neighbouring West Bengal a buyer pays Rs 5,000 as duty on a property valued at Rs 30 lakh, in Odisha it might touch Rs 2.1 lakh, he noted.

The state assembly passed the Indian Stamp Act (Odisha Amendment) Bill in 2003, but the state government, following opposition from certain quarters, had put it on hold.

The government, official sources said, decided to introduce new changes to the Act and implement it with set-off provisions to avoid 'double taxation'. "We hope the Bill would be passed in the next assembly session in December," a senior revenue department officer said.

Section 23 of the Indian Stamp Act (Odisha Amendment) 2003 says stamp duty will be levied at the rate of seven percent of the benchmark value or market price - whichever is higher - once an agreement to sell an immovable asset or a PoA for transfer of property's possession is reached.

"This means the government will charge stamp duty even before the project has actually materialized and title or interest of the property, transferred," said Tapan Mohanty, a builder. "There are several grey areas in the proposed amendment. There is no clarity on the set-off mechanism for cases where agreements are cancelled and PoAs are withdrawn," added S K Jha, a builder.


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