Stamp duty hike upsets builders

The increase in stamp duty (apart from 0.72% additional duty and surcharge) on registration of Joint Development Agreements (JDA) and General Power of Attorney (GPA) from 1 per cent to 6 per cent from April 1, 2011 has brought more worries than cheers to the government. Builders are now taking an alternative route to avoid taxes and deprive the state’s exchequer of revenues.

Sample this: The number of JDAs registered has come down from over 2,000 last year to just 154 this year. Before April 1 this year, the developers were expected to pay a flat 1 per cent stamp duty on JDA on the guidance value of property or a maximum of Rs 1.5 lakh. In case of GPA, the fee was Rs 15,000. But the increase has not gone down well with the developers taking up joint ventures as they have to pay the registration fee again after completing the projects, said sources in the registration department.

With the steep increase, the government is forcing the realtors to tread the illegal path by not registering the JDAs with the registration department, they said. Paying stamp duty for the JDA or GPA does not confer any powers to the builder. But he will end up paying the registration fee again after completing the project. To avoid paying stamp duty twice on the same property, builders are not just registering JDA and GPA projects, they added. Property owners enter into joint development agreements to make transactions bona fide. The stamp duty on JDA and GPA is imposed after arriving at the cost of the project.