Maharashtra's Stamp duty amnesty scheme may benefit housing societies

Evasion of stamp duty by members in a housing society had earlier come in the way of Deemed Conveyance

The state government’s Stamp Duty Amnesty Scheme starting from December 1 that has a provision to waive penalty up to 400 per cent on registered or unregistered documents will help cooperative housing societies complete the process of Deemed Conveyance.

The state cabinet had on November 29, decided to implement the scheme in Maharashtra between December 1, 2023 to March 31, 2024, wherein a provision has been made for exemption on stamp duty and penalty for registration of deeds executed from 1980 to 2020. Inspector General of Registrations and Controller of Stamps (IGR) Hiralal Sonawane held a meeting with all the officials in the state to explain to them the modalities of implementing the scheme.

IGR Sonawane said, “As per the cabinet decision people who want to regularise their unpaid or underpaid stamp duty, can avail the benefit, by approaching the nearest stamp office, where a separate cell has been set up. The valuation of exact stamp duty will be calculated on receiving the application and on payment of the stamp duty, the documents would be stamped.”

Another Revenue official, said,  "The private, public and listed companies, whose amalgamations/demergers are sanctioned by National Company Law Tribunal (NCLT), can also avail the benefit under the amnesty scheme. The only rider is that the document should have been executed / the NCLT order should have been passed before December 31, 2020. There are many companies, who have not paid the stamp duty, and can avail the benefit under the said scheme, as the penalty might have piled up, up to 400 per cent, over the unpaid stamp duty."

Benefit housing societies

Welcoming the amnesty scheme, Ramesh Prabhu, chartered accountant and founder chairman of Maharashtra Societies Welfare Association (MahaSEWA) said: “This scheme will help societies to take benefit of Deemed Conveyance and also to regularise their documents which were not stamped sufficiently. There are many agreements for sale, Conveyance Deed and other documents not properly stamped as required under Maharashtra Stamp Act, 1958.”

According to Prabhu, housing societies are not able to complete the process of Deemed Conveyance, if any of the flat owners have not paid the appropriate stamp duty. Prabhu said as per section 34 of Maharashtra Stamp Act, if insufficient stamp duty is paid on certain documents, they are not considered as evidence in the court of law. He said in order to regularise such documents, the beneficiary of the documents need to pay not only deficit stamp duty but also penalty on such deficit stamp duty amount at the rate of two per cent per month as the penalty. 

“The penalty amount may be up to 400 per cent of the stamp duty, which was a great burden on the people and therefore many defaulted in paying the deficit duty on such documents and thereby causing loss of revenue to the state exchequer,” he said. 

Throwing light on the possible conditions which may have led to payment of insufficient stamp duty, advocate Vinod Sampat, founder president of Registration Fee and Stamp Duty Payers Association, said that professionals found a way to evade stamp duty by citing judgments as per which the agreement to sale didn’t create the right, title and interest in the property. Thus people inked their agreements on stamp duty payment of mere R20 which later increased to R100. This loophole was plugged by the state government.

“As per section 50C of the Income Tax Act calculation of income tax depends on the market value of property as determined by the state's stamp duty department. Those who have not registered their agreements will come forward to register the agreement.  Even at the time of purchase of a flat, buyers insist on payment of stamp duty on earlier documents,” said Sampat.

Sampat said their association welcomed the amnesty scheme. “The fine print of the amnesty scheme will be known when the gazette is published. It will benefit persons who have earlier not paid stamp duty as now only a token penalty will have to be paid,” said Sampat.

Word of caution

Prabhu has a word of caution: “The documents must be executed on legitimate stamp paper purchased from an authorised stamp vendor of the department or from an authorised franking centre. If the documents executed are found to be on bogus stamp paper or on the stamp paper sold through blacklisted stamp vendors (after the Telgi scam), beneficiaries of such documents will not be able to avail this scheme.”

400%
Max penalty for stamp duty evasion

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