CHENNAI: The Tamil Nadu government is set to allow first-time homebuyers to set off the stamp duty and registration fee already paid on construction agreements against charges due at the time of registering composite sale deeds. In a G.O issued on December 19, the state accepted a proposal from the Inspector General of Registration to address what developers had flagged as double taxation following the shift to composite registration of apartments, villas and row houses from December 1, 2023.
Under the decision, stamp duty and registration fees paid on construction agreements registered on or before November 30, 2023, can be deducted from the amounts payable when the composite sale deed for the same residential unit is registered on or after December 1, 2023. The relief is limited to first-time sales and applies uniformly across apartments, flats, villas, row houses and villaments in all projects across the state. Developers say this could significantly cut registration-related disputes and litigation.
The benefit, however, is not automatic. Buyers must claim the deduction at the sub-registrar office at the time of composite sale deed registration by producing the registered construction agreement and proof of duties already paid. The registering officer will compute the net payable amount after adjustment. Developers may assist with documentation but are not responsible for refunds.
For a buyer of a Rs 50-lakh apartment, for instance, the two per cent stamp duty paid earlier on the construction agreement can now be fully adjusted at the time of composite registration.The government said the move corrects an unintended outcome of aligning registration practices with the Real Estate (Regulation and Development) Act, which mandates a single instrument for registering land and building. In the absence of a set-off mechanism, buyers were effectively being asked to pay stamp duty twice on the same superstructure.
“This was a much-needed correction to avoid penalising homebuyers for a regulatory transition,” said Habib WS, president of CREDAI Tamil Nadu. He added that the benefit should also extend to legal heirs and nominees so that succession or transfer does not result in loss of the deduction.
“However, clarity is required for homebuyers who have already paid charges under the composite system, so that refund or credit adjustments can be extended uniformly to all affected cases,” said A Mohamed Ali, president, CREDAI Chennai.
Bala Ramajayam, founder and managing director, G Square Group, said, “There are concerns about how the policy treats situations where buyers paid stamp duty in instalments or had payment plans, as well as the treatment of buyers who purchased multiple units under different agreements.”