Wednesday, October 30, 2013

RER franktalk on Stamp Act in Karnataka


Rcently, the Government of Karnataka has amended the Kamataka Stamp Act, 1957 imposing stamp duty on agreements to sell at 0.25 [point two five] per cent which is very abnormal and not matching with the stamp duty levied in other neighbouring States. The revised rates are effective from lst April, 2009. 

Advocate Selvakumar

Article 5(e)(ii) under Schedule to Amendment Act, 2009 is relevant here and it deals with the agreements or memorandum of agreements relating to sale of immovable property wherein possession of the property is not delivered and according to which the stamp duty payable would be 0.25 [point two five] rupees for every one hundred rupees or part thereof on the market value equal to the amount of consideration. Thus, for an agreement to sell of the value of the property of Rs.50,00,000/-., the stamp duty payable would be Rs.12,500/- whereas before this amendment the optimum stamp duty payable was only Rs.200/-. In the neighbouring State of Tamil Nadu, the stamp duty payable on agreement to sell is only RS.IO/- irrespective of the amountofsale consideration. 

Selvakumar Advocate

Advocate Selvakumar Bangalore

Advocatessk Bangalore

On the basis of the agreement to sell, normally the purchasers of immovable property would approach the barucs for housing loan. Banks do insist on payment of stamp duty at the prevailing rates for considering the loan application since under-stamped agreements to sell are not enforceable in a court of law. Therefore, the home loan borrowers are compelled to first spend money on stamp duty on agreement to sell, and then approach banks for housing loans. If the deal with the vendor fizzles out, the amount spent by the purchaser towards payment of stamp duty for agreement to sell would go waste since there is no provision for getting refund of stamp duty paid in such circumstances. However, for obvious reasons, some of the property developers are still paying stamp duty for agreements to sell only at Rs.200/- which is not correct. 

Selvakumar Advocate Bangalore

Property Advocate Selvakumar Advocate Bangalore

Advocates in Bangalore

In view of its abnormality, prevailing global economic recession and the weakened purchasing capacity of the borrowers, the Government of Kamataka may look into the matter afresh and revert back to the old slab system of payment of stamp duty with optimum duty of Rs.200/- for agreements to sell where possession of the property is not delivered to fall in line with other southern States. 

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