As per section 17 of the Indian Registration Act, 1908 any documents related to immovable property exceeding worth Rs.100/- needs to be compulsorily registered. This being a central Act and is being implemented by the state government as per the special power given to the state government. Further, the state government is also empowered to levy the registration fees by issuing necessary notifications. The registration fee is charged as a service charge and not as a part of taxes to increase the revenue.
In the initial years, the maximum registration fee was Rs.100 and slowly the same was increased to 1% of market value of the property or Rs.5000/- whichever is less. Normally once in 5 or 6 years the maximum amount used to be increased to Rs.10,000, then 20,000 and latest maximum amount is Rs.30,000/-. The revenue department in the late 2008 issued a notification to remove the maximum limit of Rs.30,000/-on registration fees and fixed at 1% of the market value. Considering the hue and cry of the people, just before the Lok Sabha election to gain the confidence of the people, the above notification was stayed. It is unfortunate that immediately after the taking charge as the Revenue Minister in the latest Assembly election held, Hon. Revenue Minister Narayan Rane has given the approval for lifting the stay granted by the earlier Minister on levy of Registration fees on all documents at the rate of 1% of market value.
According to the Govt. press release, this will increase the revenue of the govt by Rs.250 Crores. The Government just before the election stayed the order of increase in registration fees. The public at large voted the government, thinking that the government will continue with the policy for the welfare of the common man. When central and state government is talking about reducing the stamp duty and registration fees and making the flat at affordable rates, it is a great injustice to the people of Maharashtra. This increase will lead to increase in payment of registration fees for all the types of documents like registration fees on flat purchase agreement, conveyance deed, various purchase documents, mortgage deed etc. Earlier there was a maximum amount of registration fees of Rs.30,000/-. In cities like Mumbai, if a person is purchasing a flat worth Rs.50,00,000/-, he has to pay registration fees of Rs.50,000/- and for one crores same will be Rs.1,00,000 as against Rs.30,000/- charged earlier.
Registration fees are charged as service charges for preserving the documents by the government and not as a revenue collection measure. The government always keeps the social approach and can never think of making revenue by providing the services. It is unfortunate that the present government wants to make extra profit of Rs.250 crores on account of registration fees. In case the government thinks that there will be extra burden on it, the same should be given to the certain institutions like UTI services or NSDL, who are already providing services to the Income tax department for PAN card or TDS and other related services. This service also can be outsourced to the other agencies approved by government. There are many types of taxes like stamp duty, excise, sale tax, MVAT, Professional Tax etc. The registration fees increase should not be treated as a revenue collection measure. Maharashtra Societies Welfare Association certainly will file a writ petition in the High Court against this type of government policies, if the same is not withdrawn immediately. It is a great injustice to the people and also not keeping the promise made during the election.
This increase in registration fees will affect even the registration of conveyance deed, mortgage deed, hypothecation documents and many other documents which is being registered.
The other changes made are about the levy of stamp duty on share and security transactions.
Article 51A of the Schedule I of the Bombay Stamp Act, 1958 was inserted w.e.f. 07.05.2005, wherein a provision was made to collect stamp duty on share and security transactions (electronics or otherwise) effected by a trading member through a stock exchange or the association referred to in Section 10B of the Act.
Section !0B inserted in the Bombay Stamp Act, 1958 w.e.f . 07.05.2005 reads as under:
“10B. Stock exchange etc., to deduct stamp duty from trading member’s account.
Notwithstanding anything contained in this Act, in case a transaction through stock exchange or an association as defined in clause (a ) of section 2 of the Forward Contracts (Regulation) Act, 1952, the stock exchange or, as the case may be, an association, shall collect the due stamp duty by deducting the same from trading member’s account at the time of settlement of such transactions. The stamp duty so collected shall be transferred to the Government Treasury, Sub-Treasury or General Stamp Office in the manner specified by the Chief Controlling Revenue Authority.
“ Explanation- For the purposes of this section, “ Stock Exchange” means the stock exchange as defined in clause (j) of section 2 of the Securities Contract (Regulation) Act, 1956.”
Due to the above provision, much opposition was made by different corners and the government decided to stay the collection of stamp duty on such transactions of shares and securities.
Now, Hon. Minister Narayan Rane has approved a proposal to withdraw the stay on such provision under the pretext that the share brokers show their offices at different states and evade the duties and stamp duty as provided in the Act will now be recovered from such brokers. It is also estimated that government will earn additional revenue of Rs.2185 crores from only share trading transactions. This move of the government will certainly discourage the share trading and also increases the cost of share dealing. In this era of electronic exchange and the transactions in BOMBAY STOCK EXCHANGE being more and the transactions are happening all over India, how the government will be able to collect stamp duty on all such transactions is a big question mark. It will open litigation and the economy which is just recovering will be hit by this provision.
By CA. Ramesh S. Prabhu
Chairman, Maharashtra Societies Welfare Association.