Registration fee, a burden on buyers

Stamp duty and registration fee imposed by the state government during property registrations have become a major burden on the buyers. Andhra Pradesh has the distinction of collecting higher stamp duty and registration when compared to some of the major states. Currently, the state collects 9.5 per cent towards registration charges, which includes nine per cent stamp duty and point five per cent registration fee. While the other states were adopting different stamp duty structures for urban and rural areas, in our state, the disparities have been abolished in 2005 and a common duty structure was being implemented. Maharashtra collects only 5.5 per cent stamp duty. Earlier it was 8.5 per cent. Uttar Pradesh has been offering more incentives to women. If a property is registered on the name of a woman, it is collecting only 6 per cent stamp duty, which has been reduced from 8 per cent. Even for men, it is only collecting 7 per cent, which has been cut down from 10 per cent.

While states like Rajasthan were collecting only 6 per cent stamp duty, Karnataka and West Bengal were adopting different tax structures for urban and rural areas. West Bengal is imposing 6 per cent stamp duty for transactions in villages and 8 per cent duty for towns. This is in addition to 1.1 per cent, which is imposed as registration fee. The state government had earlier announced that it will cut down stamp duty by 1 per cent every year so as to reach the target of 5 per cent by 2012 from the current 9.5 per cent. As per this, it has to cut down the stamp duty by 1 per cent this year, but still nothing has been done on that front.

However, according to officials of revenue department, the chances of reducing stamp duty in the state are meagre as the state government is heavily dependent on the revenues generated from the revenue department through land and property transactions to fund its massive populist schemes announced in the election year. The heavy stamp duty is leading to irregularities during registration. Several buyers are resorting to under-valuation of property to escape from huge stamp duty while sometimes it is leading to evasion of registration charges. Several buyers, particularly in rural areas are entering into illegal sale agreements to avoid duty by entering into agreements on a ‘plain paper’.

Koneru Ranga Rao committee, which was set up by the state government to initiate land reforms has estimated that nearly 20 lakh property deals are ‘illegal’ as they were entered on a mere ‘plain paper’ and out of this 82 per cent buyers are from poor and rural background. While the other states were reducing stamp duty and increasing their revenues, the state government has been increasing duty on General Power of Attorney (GPA) to force people to opt for registrations instead of GPA to increase its revenues. While other states were reporting good results with reduced stamp duty, the revenue generation of AP was stagnated for a while now, despite increase in stamp duty. However, Karnataka is the exception in the list of the states, which collects lower stamp duty. It collects more than our state. It follows dual duty structure. While in Bengaluru, it is imposing 12 per cent stamp duty, for the rest of the areas it is 11 per cent. Tamil Nadu is imposing registration charges at 9 per cent.