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Stamp duty is a state subject and is administered by the respective states. The government of Maharashtra, on March 1, 2019, announced an amnesty scheme with respect to the penalty that can be levied for insufficient payment of stamp duty made in the past. The scheme is available only for certain real estate transactions.
Stamp duty in Maharashtra and existing penalty provisions
When you enter into any transaction of immovable property, whether it is a lease or sale or mortgage of the property, you are required to pay appropriate stamp duty on the agreement under which such transaction is being done. You are also required to register the document with the office of the registrar.
In case adequate stamp duty is not paid with respect to any instrument, the instrument is not accepted as evidence in any legal proceeding. Moreover, such inadequately stamped documents can also be impounded by the judicial authority, as and when submitted as evidence.
In order to rectify any such infirmity in the inadequately stamped document and to make it admissible as evidence, you are required to pay the differential amount of duty. You are also required to pay a penalty, calculated at 2% of the deficient amount of stamp duty, from the date of execution of the document till the date of payment of deficient stamp duty. However, the maximum amount of stamp duty that can be levied in such cases shall not exceed 400% of the deficient duty.
Gist of the Maharashtra stamp duty amnesty scheme
The scheme proposes to limit the penalty payable on certain transactions to 10% of the deficient stamp duty, instead of the 400% which can be levied in normal course by the government. The scheme can be availed of only with respect to inadequately stamped documents and cannot be availed of, if no stamp duty has been paid at all for such instrument. However, for documents executed by government corporations like the Maharashtra Housing and Area Development Authority (MHADA), City and Industrial Development Corporation of Maharashtra Limited (CIDCO) and Slum Rehabilitation Authority (SRA), the benefits under this amnesty scheme can be availed of, even if no stamp duty has been paid on such documents.
The scheme applies to all the transactions of sale or transfer of tenancy rights, of residential houses within Maharashtra. It even covers any instrument purporting to allot, transfer or sale any of the units in a housing society, which are eligible for deemed conveyance or for which deemed conveyance is pending. It also applies to transactions of allotment or transfer of all the immovable property units, whether residential or non-residential, of CIDCO, MHADA or SRA.
You can avail of the amnesty scheme for all the cases where the action for recovery of deficient duty has been initiated, or the cases which are subject matter of appeal before any stamp duty authority or before any court of law and with respect to which no decision has yet been pronounced. In case of pending appeal, you will have to withdraw the appeal unconditionally, before making an application under this scheme, with a declaration to this effect in the application form. You can also avail of this scheme for the documents that were not adequately stamped and you want to get them regularised. You can also avail of the benefit under this scheme, in cases where applications were made under any previous amnesty scheme and the stamp duty and penalty was not paid, by filing a fresh application.
However, you cannot avail of the amnesty under this scheme, to claim any refund of penalty if the same has already been paid, before the announcement of this scheme. This scheme is available only for documents that have been executed on or before December 31, 2018.
How to avail of the amnesty scheme on stamp duty penalty?
Any person who is party to any documents, or his successor in the title to the property, as well as power of attorney holders, are eligible to apply under this scheme.
In case you wish to avail of the benefit of reduced penalty under this scheme, you are required to make an application in Form A prescribed under the scheme. You are required to furnish your basic details, as well as that of the property which is subject matter of the documents. You are also required to submit the original instrument on which inadequate stamp duty was paid, along with self-attested copies of the other supporting documents. The application, along with the instrument and supporting documents, has to be made within a period of six months from March 1, 2019, i.e., by August 31, 2019, the period up to which the scheme will remain open.
Once the application is received in the stamp office, the amount of deficient duty, as well as the amount of penalty, will be communicated to you, based on the details submitted by you through an order. You are required to pay the amount stated in the order within 60 days, failing which your application will be treated as null and void.
Whom will this scheme benefit?
This scheme will benefit all the property owners who had purchased their present property in a housing society or those constructed by MHADA, CIDCO or SRA and the agreements thereof, were made only on stamp paper of nominal amount, or even in cases where the sale transaction was made on a plain paper, at a time when the registering authorities were not under any obligation to ensure that adequate stamp duty was paid on the document purporting to transfer the title in the property. This will help such owners to sell the property with ease, as the defect of inadequate stamp duty gets cured. It will also help many housing societies, where the conveyance is not yet done and wish to avail of the facility under deemed conveyance, for the land on which the building of the society is constructed. This will also help the residents of old housing societies who wish to opt for redevelopment.
(The author is a tax and investment expert, with 35 years’ experience)