Introduction:
Stamp Duty is a levy payable on instruments specified by statute. In India, the payment of Stamp Duty is governed by the provisions of the Indian Stamp Act, 1899 (ISA). The ISA also contains state specific amendments which specify the amount of stamp duty payable on instruments in various states. However, in Maharashtra, the law governing Stamp Duty is the Maharashtra Stamp Act, 19581 (MSA). Section 3 of the MSA, read with Schedule – I2 (Stamp Duty on Instruments) appended therein, speaks about the instruments chargeable with duty.
Deficiently stamped instruments:
Chapter IV of the MSA governs the provisions relating to insufficiently stamped instruments. Section 34 of the MSA specifically states that instruments which are not duly stamped shall not be admissible as evidence. The exceptions to this, however, are that such instruments shall be admitted on the payment of both the appropriate amount of duty, and a penalty of 2% on the deficient portion of duty for every month or part thereof, from the date of execution of such instrument. The penalty shall in no case, exceed four times the deficient portion of stamp duty.
Amendments:
The Maharashtra Stamp (Second Amendment) Act, 20173, modified the applicable rate of stamp duty in case of Conveyance (Article 25 therein, more specifically, Article 25(b)(ii) and 25(b)(iii)). Furthermore, the Revenue and Forests Department (Department) vide the Maharashtra Stamp (Amendment and Validation) Ordinance, 20214, amended Section 5 of the MSA (where the expression "or transactions" has been inserted both after "several distinct matters", in the first line therein and after "such matters", in the penultimate line, pursuant to the judgement of the Bombay High Court in Navi Mumbai SEZ Private Limited vs The State of Maharashtra and others5, in Writ Petition No. 8014 of 2019, which held that the phrase "distinct matters" shall mean the same as "distinct transactions"), and modified the rate of stamp duty in Articles 6 (Agreement relating to deposit of title deeds, pawn, pledge or hypothecation) and 40 (Mortgage Deed) of Schedule – I to the MSA.
Other noteworthy amendments are the Maharashtra Stamp (Second Amendment and Validation Act), 20216, which expanded the scope of "Conveyance", by amending both Section 2(g) of the MSA, which brings orders passed by the High Court, National Company Law Tribunal and confirmations of the Central Government / Orders of the Reserve Bank of India, under various sections of the Companies Act – both 1956 and 2013, as well as the Banking Regulation Act, 1949, along with the orders of the Board for Industrial and Financial Reconstruction under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985, within the ambit of "Conveyance"; and sub-clause (da) to Article 25 (Conveyance) of Schedule – I therein, which brings the orders of the Board for Industrial and Financial Reconstruction and the National Company Law Tribunal within the ambit of Conveyance; and the Maharashtra Stamp (Amendment) Act, 20227, which amends Article 5(g-a)(ii) (Article 5 deals with the stamp duty on Agreement or its records or memorandum of an Agreement), of the said Schedule – I, extending the period for availing benefit of stamp duty adjustment with regards conveyance of property of a unit from "within one year" from the date of agreement to "within three years".
Maharashtra Stamp Duty Amnesty Scheme 2023:
The Department, vide notification no. Mudrank-2023/C.R.No.342/M-1(Policy), dated December 07, 2023 (Notification)8, introduced the Maharashtra Stamp Duty Amnesty Scheme, 2023 (2023 Scheme). The 2023 Scheme seeks to ensure remission / reduction of stamp duty and penalty on instruments which are chargeable under the MSA.
Before delving further into the 2023 Scheme, it is worth noting that the Department has introduced such amnesty schemes earlier as well, in 20199 (2019 Scheme) and 202210 (2022 Scheme). However, the 2023 scheme is more elaborate and inclusive than the earlier schemes, which were not complete in one way or the other, i.e., the 2019 Scheme imposes a flat 10% reduction on the total penalty of deficit duty payable on certain types of instruments, and renders unstamped instruments executed on plain papers ineligible for any benefit(s), except instruments executed by the Maharashtra Housing and Area Development Authority (MHADA), City and Industrial Development Corporation of Maharashtra Limited (CIDCO), and the Slum Rehabilitation Authority (SRA), whereas the 2022 Scheme is applicable only to those instruments which are already involved in cases before the relevant authority / court, in which recovery of deficient stamp duty and penalty as arrears of land revenue has been initiated / proposed.
In comparison, the 2023 Scheme clearly lays down the instruments to which it shall apply, which have to be executed on any amount of stamp paper, exclusively sold by Government approved stamp vendors / any agency / any competent authority authorized by the Chief Controlling Revenue Authority.
Any document(s) / instrument(s) executed on a plain paper without any stamp duty will not be eligible for remission / reduction of stamp duty / penalty, under the 2023 Scheme. Here, the 2023 Scheme clearly differs from the 2019 Scheme, in the sense that the latter, while rendering unstamped instruments executed on plain papers ineligible for any benefit(s), exempted instruments executed by MHADA, CIDCO and SRA from such ineligibility.
The 2023 Scheme shall also be applicable to instruments for which action under certain sections of the MSA has already been initiated / appeal / review application is pending decision before any court / authority. However, where such appeal / review application is pending decision, applicant shall unconditionally withdraw his / her / their case and submit a declaration to that effect along with his / her / their application.
The 2023 Scheme shall be implemented in two phases – Phase 1 from December 01, 2023, to January 31, 2024, and Phase 2 – from February 01, 2024, to June 30, 2024. Both these phases offer different rates of reduction / remission for stamp duty and penalty, with rates differing for instruments executed from January 01, 1980, to December 31, 2000; and for instruments executed from January 01, 2001, to December 31, 2020.
Procedure:
Applicant(s) seeking relief under the 2023 Scheme shall submit their application in the form appended to the Notification, along with the original and self-attested copies of supporting documents, before the last dates under the respective phases. The application has to be made online11, with submission of proper evidence, as per the Annual Statement of Rates and Guidelines12 issued by the Chief Controlling Revenue Authority, Maharashtra.
To avail benefits under the 2023 Scheme, the applicant must pay deficient stamp duty / penalty, within seven days of receiving the demand notice.
Conclusion:
The 2023 Scheme has had quite an impact on real estate transactions across Maharashtra. Property owners, who were unable to sell their properties due to pending regularization of earlier agreements, are now able to do so since regularization is being done by paying a nominal amount of penalty / duty as prescribed in the 2023 Scheme.
The 2023 Scheme provides a breather, not only to developers, helping them navigate regulatory compliances in a seamless manner and execute projects with better efficiency, but also is immensely helpful to property owners in obtaining loans against properties which had stamp duty payments pending.
The 2023 Scheme was earlier in force till March 31, 2024 (erstwhile last date under Phase – 2). The Department though, vide notification dated March 15, 202413, has extended the last date under Phase – 2 to June 30, 2024.
Footnotes
1 https://igrmaharashtra.gov.in/SB_PUBLICATION/DATA/Schedule/_STAMP_ACT%20amended%2003.6.2022.pdf
2 https://igrmaharashtra.gov.in/pdf/documents/The_Maharashtra_Act_Schedule_1_and_2.pdf
3 https://igrmaharashtra.gov.in/pdf/documents/Act_MSA_(SECOND)_AMENDMENT_2017.pdf
4 https://lj.maharashtra.gov.in/Site/Upload/Acts/Mah_Ord_No_1_of_2021.pdf
6 http://mls.org.in/assembly-bill/38%20OF%202021%20(ENG).pdf
7 http://mls.org.in/council-bill/2022/(L.%20A.%20Bill%20No.%20XI%20of%202022)%20English.pdf
9 https://igrmaharashtra.gov.in/pdf/documents/amnesty_2019.pdf
10 https://igrmaharashtra.gov.in/pdf/documents/AbhayYojna2022NOTIFICATION.pdf
11 https://isarita.igrmaharashtra.gov.in/AbhayYojana/login.php
12 https://igreval.maharashtra.gov.in/eASR2.0/
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