CHENNAI: Minister for Commercial Taxes C Ve Shanmugam on Thursday introduced Bills aimed at plugging loopholes to evade stamp duty and making the registration of Power of Attorney documents relating to immovable properties compulsory. According to the Bill to amend the Indian Stamp Act (ISA) introduced on Thursday, one per cent stamp duty on agreements relating to construction of any building on an undivided share of land can be levied. The Registration Act will be amended separately to make the registration of such agreements compulsory.
The Bill said the maximum limit of stamp duty payable on instruments of partition, dissolution of partnership, release and settlement among family members, would be removed as the maximum limit was fixed in the year 2004 and the value of properties has increased manifold.
Explaining the reasons behind the amendment, the Bill said real estate developers in metropolitan cities and major towns either buy land from the land owners or enter into joint ventures with the land owners and construct flats on these lands. While constructing these flats, the real estate developer or the land owner sells only the undivided share of land and registers a sale deed for this conveyance only.
As far as the built up area is concerned, the real estate developer enters into a construction agreement with the prospective buyer and does not register the construction agreement, as it is only an optional document, the Bill observed.
The ISA provides for charging eight per cent stamp duty only on the agreements entered into by the vendor for constructing a multi-unit house or building having not less than five floors on the land sold by that vendor and the vendee.
In the case of first sale of flats, in most cases, the owner of the land is different from the person who constructs the building. Hence, the purchaser of the flat gets the land, which is undivided, conveyed by the owner of the land and he enters into a construction agreement with the flat developer, who is a different person.
Ultimately, the construction agreement entered into between the purchaser and the flat developer does not fall within the ambit of the ISA and they escape from the payment of stamp duty, the Bill pointed out.
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.
■ The State government does not have the power to change the name of the Madras High Court, CM J Jayalalithaa said in reply to PMK member A Ganeshkumar’s plea for changing the name to Chennai High Court.
■ The Tamil Nadu government has earned a tax revenue of `3 crore from 4 IPL cricket matches held in Chennai, Commercial Taxes Minister C Ve Shanmugam said. The government levied a tax of 25 per cent for IPL matches through an amendment to the Tamil Nadu Entertainment Tax Act 1939 last September.
■ The State government should release prisoners who have served a 10-year sentence on Anna’s birth anniversary, said M H Jawahirullah, Manithaneya Makkal Katchi MLA.
■ Tamil Nadu should have earned `25.25 crore as tax on DTH services from Sun Direct alone. However, the company has gone to court and obtained a stay order, Minister C Ve Shanmugam said.