The Tamil Nadu government on Friday introduced a new Bill aimed at controlling the evasion of stamp duty and making the registration of power of attorney documents relating to immovable properties compulsory.
The Indian Stamp (Tamil Nadu Amendment) Act 2012, which was introduced in the state Assembly today by minister for commercial taxes C Ve Shanmugam, provides for levy of 1 per cent stamp duty on construction agreements relating to buildings on undivided share of land. The registration Act will also be amended to provide for compulsory registration of such agreements.
Real estate developers either buy a plot of land or enter into a joint venture with land owners to construct apartments. They register the sale deed only for the undivided share of land. The developer enters into a separate construction agreement (that need not be registered) with the apartment buyer, the state government said in its policy note.
“This helps them to get around the stamp duty on the built-up area. The proposed change in the law plugs this route for tax evasion,” the note said.
From April 1, Tamil Nadu levies a total of 8 per cent duty, including 5 per cent stamp duty, 2 per cent transfer duty and a registration fee of 1 per cent. Earlier, the stamp duty was 6 per cent. This reduction in stamp duty means that the state loses over Rs 600 crore a year, according to the policy note on stamps and registration.
The amendment to the Indian Stamp Act 1899 also does away with the maximum limit of Rs 10,000 on stamp duty payable on documents relating to partition, dissolution of partnership and release and settlement among family members.
The commercial taxes minister introduced another Bill to amend the registration Act, making it compulsory to register power of attorney documents relating to immovable properties.
Yet another Bill introduced by the minister was aimed at attracting stamp duty for mergers and restructuring of companies. The Bill provides for levy of stamp duty on transfer of properties as part of amalgamation or reconstruction of companies.
The minister also introduced a Bill to amend the Tamil Nadu VAT Act seeking to make ‘entry’ regarding the aviation turbine fuel in tune with the central sales tax.
In 2011-12, the commercial taxes and registration department earned Rs 6,619.98 crore from the registration of 3.5 million documents, according to the note.