In a significant move to bolster the Information Technology (IT) sector, the Maharashtra Government, exercising its powers under Section 9 of the Maharashtra Stamp Act 1958 (Act), notified the stamp duty exemption for IT projects on 1 February 2024 (Notification) as envisaged under the New Information Technology and Information Technology Enabled Services Policy of Maharashtra State-2023 (2023 IT Policy).
This Notification, effective from 27 June 2023 up to 26 June 2028, introduces a full or partial waiver of stamp duty, ranging from 50% to even 100% remission for eligible new and expansion diversification units or projects falling under Information Technology, Information Technology Enable Services (ITES), Animation, Visual Effects, Gaming and Comics (AVGC) units, Data centres, and Emerging Technology Units as an incentivising step.
These stamp duty remissions have been provided under various articles of schedule I to the Act, including Hypothecation, Pawn, Pledge, Deposit of Title Deeds (Article-6), Conveyance (Article-25), Charge on Mortgage Property (Article-33), Lease (Article-36), Mortgage Deed (Article-40) and Security Bond on Mortgage Deed (Article-54).
Scope and Applicability:
The scope of this initiative is extensive, encompassing various IT-related activities, and aims to drive growth in Maharashtra's IT sector. The IT/ITES units falling within the defined zones and meeting specific criteria are eligible for stamp duty exemption.
The Notification, defines "IT/ITES unit" as the Information Technology Unit (IT Unit) or Information Technology Enabled Services Units (ITES Units), Data Centers, Animation, Visual Effects, Gaming and Comics (AVGC) and Emerging Technology Units so certified by the competent authority of the Industries Department appointed under the 2023 IT Policy or any other officer authorized by it in this behalf, as such unit. Further, it is clarified in the 2023 IT Policy that categorization as an IT Software unit or as an ITES, also requires that the unit's annual turnover of IT Software or of ITES exceed 75% of its total annual turnover in value terms.
Further, the region of Maharashtra has been categorized into Zone I, which includes Mumbai Metropolitan Region and Pune Metropolitan Region, and Zone II, which includes areas other than those in Zone I & No Industry Districts, Aspirational Districts & Naxalite affected area.
Detailed explanations of existing IT &ITES/ AVGC Unit and new IT &ITES/ AVGC Unit have also been provided in the 2023 IT Policy.
Procedure for availing benefits:
The IT/ ITES unit must obtain a Letter of Intent for the concerned IT/ ITES activity from the Directorate of Industries in order to qualify for stamp duty exemption under the Notification, which shall be followed by a No Objection Certificate issued by the Competent Authority of Industries Department verifying that the unit has not availed any stamp duty exemption, under any other policies of Government of Maharashtra issued in this behalf. Upon grant of the No Objection Certificate, the IT/ITES Unit must make an application to the Department of Industries as per the prescribed format seeking approval for the exemption of stamp duty. Upon scrutiny of the application and eligibility of the unit, the exemption shall be approved if the unit is so qualified.
Further certain other conditions have been imposed on the stamp duty exemption which inter alia requires that any IT/ITES Unit seeking such stamp duty exemption under the Notification shall be required to produce a valid Commencement Certificate or RERA Approval from the concerned Planning Authority or Competent Authority.
MHCO Comment: While the 2024 Notification is a commendable step towards fostering the IT industry in Maharashtra, certain ambiguities require clarification. However, the lack of explicit details on what constitutes 'additional fixed capital investment' poses a challenge, particularly regarding land purchase for expansion/diversification. Clarity in these aspects is vital for ensuring a seamless and transparent application of the 2023 IT Policy.
From a macro analysis perspective, the 2024 Notification is poised to invigorate the IT sector in Maharashtra. By providing momentum to existing market players and creating a welcoming environment for new entrants, it lays the groundwork for Maharashtra to emerge as the technology capital of India. However, ongoing dialogue and clarification on finer points will be essential to optimize the 2023 IT Policy's impact and ensure its effectiveness in driving sustained growth in the state's IT ecosystem.
This article was released on 8 March 2024.
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