The Maharashtra state government has made a u-turn and revoked its decision to hike stamp duty on gift deeds. This was passed by the cabinet just a few days ago. The cabinet had amended the Maharashtra stamp duty act and hiked stamp duty on gift deeds from INR 500 to three percent of the land value. The news had led to a pushback from within the establishment. Revenue minister Chandrakant Patil, on Wednesday, stated that no decision has been taken to increase duty on gift deeds and described all this as a “miscommunication.”
A gift deed is required when a property is transferred to a blood relative or a spouse without any payment. A conveyance deed is required to transfer of ownership of any property.
“Government has not touched stamp duty for conveyance deeds in Mumbai city but has raised it in rural areas by 1%. Poor people in rural areas should not be burdened by such hikes, so we demanded a rollback,” Transport minister Diwakar Raote told The Economic Times.
As a result of protests, the government has been forced to backtrack partially. Patil recently stated that the government has decided to go back to the 2015 position on stamp duty for gift deeds.
“There is no change in that decision. We are making losses of Rs 500 crore because of the decision but we are yet not increasing duty,” he said.
The current state of finances is to blame though the government has retained the new duty structure for conveyance deeds. However, through the increase in stamp duty on gift deeds, the government was looking to make an additional INR 300 crores. Revenues are not growing at a fast rate and the debt burden is not going down either. However, the government can look to at least make part of the money by sticking to the new duty structure for conveyance deeds. In rural areas, stamp duty on conveyance deeds was raised from four to three percent of land rate.
In peri-urban areas, this rate has been made five percent from four percent, governed by municipal councils. Officials have said that the decision to bring down stamp duty in 2015 was only on farm and residential land that would be transferred to blood relatives. It never covered other kinds of properties. For other types of properties, the stamp duty was two percent.
“The government is now trying to show that the increase in stamp duty will be only on the properties which were already paying two percent and that the hike has been only by one percent,” said one official.