CHENNAI: In a bid to promote housing for lower income groups, the State government has exempted payment of stamp duty and registration fee for gifting of roads as well as the transfer of land in consideration of Transferable Development Rights (TDRs).
TDR is a mechanism where the government compensates the developer or owner of the land by entitling him to floor space index through a development rights certificate. A GO was issued to this effect by C Chandramouli, additional chief secretary, Commercial Taxes and Registration Department.
This comes as a ‘gift deed’, which is executed in favour of the Chennai Metropolitan Development Authority for public purposes as the form of consideration of ‘Development Rights’ was not valid under the Transfer of Property Act, 1882. The Act prevents a donor from receiving ‘consideration’ in a gift. The other hitch was the GO which stated that an instrument qualifies to be classified as ‘Gift’ or ‘Settlement’ if it is executed by a citizen only.
It is learnt that the government, after consultation with the Chennai Metro Rail Managing Director and the CMDA member-secretary, has extended stamp duty and registration fee exemption to instruments executed for public purposes in favour of the CMDA or the CMRL even when there is a ‘Consideration’ in the form of TDRs involved. The stamp duty and registration fee is now exempted to any instrument executed in favour of government or any local authority where properties are given for any public purpose and to omit ‘citizens’ appearing in notifications.
S Ram Prabhu, secretary, Builders Association of India, has welcomed the move and said that it would benefit a developer who could use the floor space index guaranteed by the TDR and use it to develop property in some other area.
Interestingly, TDR mechanism lacks legal sanctity like the new Land Acquisition Act and there is no market for it. Prabhu said that the Confederation of Real Estate Developers Association is working on giving a legal sanctity to it.
However, planners feel that the government has not amended the Town and Country Planning Act to give legal sanctity to the TDR as recommended by Justice Mohan Committee report.
They feel that there is a need for to ensure that TDR can be tradable like a currency; then only the exchange of TDRs could be made successful.