The state government has announced a major relief for thousands facing stamp duty and penalties on old properties. For transfers through allotment letters or share certificates by societies, associations, and non-trading corporations, up to 80% of payable duty will now be waived.
Property owners will pay just 20% of the original duty amount, along with applicable penalties. The government has also assured that the total amount-including penalties-won’t exceed what was previously payable as duty alone.
This decision brings welcome relief to property owners who were staring at four times the penalty under April’s amendment to the Stamp Duty Act.
Background to the issue
Legal experts confirm that the government began charging stamp duty and penalties on properties allocated between 1982-2001 through share certificates or allotment letters, rather than through registered sale deeds. Since 2001, the government has charged 5% stamp duty on sale transactions.
The duty was imposed on those wanting to create sale deeds or transfer old properties to third parties. The situation worsened when the April amendment to the Stamp Duty Act introduced a fourfold penalty on original stamp duty amounts.
For instance, if someone’s stamp duty was calculated at Rs 50,000, they faced nearly four times that in penalties. This meant a Rs 2 lakh penalty plus original stamp duty, totalling Rs 2.50 lakh.
Legal community welcomes relief
“This is big relief for property owners as the government has charged stamp duty to two to three thousand persons in the past three months in the city alone. Now they don’t have to pay a hefty penalty. Our representations yielded results,” said Nilesh Trivedi, city-based solicitor.
“The penalty clause was introduced in April after the government amended the Stamp Duty Act,” he explained. “In my view, the government shouldn’t charge such stamp duty with retrospective effect. As per the earlier position before April, it should charge stamp duty and Rs 250 penalty.”
Public difficulties resolved
Many citizens held back from registering sale deeds due to the hefty penalties. Numerous deals were put on hold or cancelled altogether. Satish Vaishnav (name changed) made a deal for his apartment, but when documents were submitted for the sale deed, authorities slapped him with a Rs 2.75 lakh challan for old stamp duty. This forced him to put the deal on ice.
In another case, Francis Mackwan (name changed) bought a house in Naranpura. His seller refused to pay the stamp duty challan of around Rs 2.59 lakh issued by authorities. The seller insisted Mackwan should foot the bill, leaving their deal stuck in limbo.
Redevelopment impact addressed
Old stamp duty also created headaches for buildings entering redevelopment deals with societies. Builders pushed older flat owners to pay the stamp duty while owners shifted responsibility back to builders, leading to tough negotiations.
In some cases, flat owners simply couldn’t afford such heavy penalties and refused to sign development agreements. This stalled redevelopment projects across the city.
The bottomline
A person supposed to pay Rs 1 lakh stamp duty was earlier levied four times the penalty. Hence, the total payable amount came to Rs 1 lakh + Rs 4 lakh penalty = Rs 5 lakh. With the latest move, the penalty will be completely waived off. The payable amount will be stamp duty payable (Rs 1 lakh) minus 80% waiver which comes to Rs 20,000 along with four times penalty as per norm. The total payable stamp duty thus comes to Rs 20,000 stamp duty plus Rs 80,000 penalty = Rs 1 lakh.