Maharashtra caps stamp duty at Rs 25 cr

mumbai: mergers, amalgamations and acquisitions, leave and licence agreements and housing loan mortgages will soon be less expensive in maharashtra. the state government has slashed stamp duty applicable to these categories. it has also extended the leave and licence agreement period to 33 months from the earlier 11 months. the state cabinet, in a recent meeting, has decided to rationalise the stamp duty structure. according to top state government functionaries, the notification, ratifying these changes, is expected to be issued this week. the government has decided to put a cap of rs 25 crore on stamp duty being charged on mergers, demergers and other corporate transactions. currently there is no ceiling on the stamp duty being charged. at present these transactions are charged stamp duty at seven per cent of the value of the company’s assets or 0.7 per cent of the market value of the shares, “whichever is higher.� however, the most significant change will be in the structure of leave and licence agreements. the present system allows leave and licence agreements to be signed for only 11 months. the government last year made registration of all property agreements mandatory, including leave and licence agreements. leave and licence agreements will also attract a lower stamp duty. the amendment to the maharashtra rent control act says if the earnings from the property — for which a leave and licence agreement has been signed — is less than rs 2.5 lakh per year, including the deposit, it will attract a stamp duty of just rs 500. if net proceeds from the property are between rs 2.5 lakh and rs 5 lakh, the stamp duty will be rs 1,000 and for receipts exceeding over rs 5 lakh, the duty will be rs 2,000. under the leave and licence agreement, the deposit is an amount which has to be returned after a specified period of time. often, huge amounts are taken as deposits. under the current dispensation, stamp duty calculations are done according to article 36 of the bombay stamp act pertaining to lease documents. in these circumstances, the authorities recover the stamp duty at the rate of 3 per cent of the income from the leave and licence transaction for properties valued at above rs 10,00,000 for residential premises. the stamp duty is the rate of 10 per cent for commercial premises, on the deposit as well as the lease amount. the new system is expected to bring cheer to the housing sector as the stamp duty on housing loan mortgages too has been brought down to one per cent from the current rate of two per cent. the government has also proposed a cap of rs 200,000 on the stamp duty. which means irrespective of the cost of the property, the stamp duty will not exceed rs 200,000. stamp duty is the second largest revenue earner for the state government, with over rs 1,800 crore collected annually, of which rs 900 crore comes from mumbai.