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July 10, 2020

Changes in Stamp duty and Registration of Documents in Mumbai due to COVID 19

by Mahesh Mara in Compliance Law

Changes in Stamp duty and Registration of Documents in Mumbai due to COVID 19

The economic impact of the 2020 coronavirus pandemic in India has been largely disruptive. The lockdown though necessary has led to a disastrous impact on the economy. The Government of India announced a variety of measures to tackle the situation, from food security and extra funds for healthcare and for the states, to sector related incentives and tax deadline extensions. Stamp duty and registration charges in Mumbai remain one of the biggest sources of revenue for the state government of Maharashtra. The government has been banking on Mumbai’s real estate boom to fuel growth and development. However the government has provided various reliefs pertaining to stamp duty charges considering the current COVID 19 crisis.

Reduction in Stamp Duty

  • Government announced concessions for two years from 1st April, 2020 in stamp duty for registration of documents in Mumbai, Mumbai Metropolitan Region, Pune, Pimpri-Chinchwad and Nagpur.
  • The duty will be reduced by 1% from existing 6% to 5% in these areas which would give a boost to the construction sector.

With this order the effective stamp duty rates in Mumbai are tabulated hereunder:-

    Description of InstrumentStamp Duty Rates (w.e.f. 01.04.2020 till 31.03.2022)Stamp Duty Rates (From 08.02.2019 till 31.03.2020)
Instrument of Sale deed5%6%
Gift to a Non Relative5%6%
Gift to Relative – a family-member (husband, wife, brother, sister of the donor or any lineal ascendant or descendant of the donor3%4%
Gift of residential and agricultural property to husband, wife, son, daughter, grandson, granddaughter, wife of deceased sonRs.200Rs.200/- plus 1% of ASR

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Annual Statement of Rates (ASR)

  • The Maharashtra government said it had kept the circle rates unchanged for the current fiscal as it could not assess new rates in wake of the current coronavirus crisis.
  • Ready reckoner rate (circle rate) is the minimum price at which a property has to be registered in case of its transfer
  • Every year, the government’s revenue department determines the stamp duty ready reckoner rate for the state according to market dynamics, which are revised on April 1 of that year.
  • Initially due to limited employee strength and later due to the extended lockdown, the assessment of the ASR could not be done. As a result, the rates were kept unchanged for the period from April 1 till May 31, till further orders.
  • However, since the assessment could not be completed within the timelines, it has been decided to keep the rates unchanged for the entire fiscal year till further orders.

Summary of Circulars issued by the department of Registration and Stamps pertaining to relaxations and instructions in the backdrop of the COVID 19 pandemic

Circular dated 19th April, 2020 pertaining to Precautions to be observed during the registration of documents in the office of Sub-Registrar

  • Citizens to take prior appointment by eStep-in for the offices within the jurisdiction of District Head office and for other offices prior appointment can be taken by eStep-in or through office telephone or by personally visiting the office. The principle of First In First Out to be observed
  • Citizens to remain present in the Sub-Registrar office during reserved time slot only;
  • Initially only the party presenting document and his/her Advocate, if present, shall be given entry in the office
  • Only after the scrutiny of documents, other parties shall be given entry in the order of their names appearing in document for the purpose of recording of Kabuli Jabab. If there are many parties in one document then maximum of 4 persons shall be allowed at one time
  • Parties to stand in queue for the purpose of recording Kabuli Jabab before the Sub-Registrar/Operator (7 ft. distance to be maintained for social distancing);
  • Parties to ensure that their hands are properly cleaned and sanitized before recording Kabuli Jabab
  • Parties to remove the face mask to the extent required for taking photographs;
  • Parties to bring their own ink/ball pen and not to use other Person/parties’ pen;
  • After recording Kabuli Jabab, parties should immediately leave the office
  • After registration of document (Stamp V) the party presenting document and Advocate should immediately leave the office
  • While recording the Kabuli Jabab, a thumb impression of the party is taken
  • It has been clarified that if the party is not willing to append thumb impression digitally (i.e. on thumb device) due to fear of Corona virus then option of “Device Not Working” should be selected by Sub-Registrar in case of such party and physical thumb impression by using Ink Pad to be taken by following due process.

Circular dated 27th April, 2020 issued by the department of Registration and Stamps on Stamp Duty of Finance Documents –

  • Banks/NBFCs execute many documents in the process of providing loans/finance on which stamp duty is payable. Such set of finance documents comprises certain documents which are compulsorily registrable and some not compulsorily registrable as per the Indian Registration Act, 1908.
  • The Government of Maharashtra has prescribed guidelines for the payment of stamp duty on documents that are executed in the financing operations of banks and NBFCs.

Compulsorily Registrable Documents – In case of these documents, stamp duty can be paid by generating e-Challan by using governments GRAS online facility without any hassles.

Not Compulsorily Registrable Documents – In case of these documents (eg. Hypothecation, Personal Loan Agreement), the facility of payment of stamp duty through e-Challan by using government’s GRAS online portal is not available. The Stamp duty on such documents can be paid by following ways:

  • Stamp Papers (if the amount is upto Rs. 500/-); or
  • Franking (if the amount is upto Rs. 5000/-);
  • Electronic Secure Bank and Treasury Receipt (eSBTR) (if the amount is above Rs. 100/-).

However, due to the lockdown, the payment of stamp duty through the above 3 ways is not possible for the banks or customers. In view of such non availability of stamps, the execution of documents would be affected resulting into the banks/NBFCs refusing to provide the loan/finance.

In order to deal with such demanding situation w.r.t payment of stamp duty on not compulsorily registrable documents during the lockdown, the government has issued the following instructions/clarifications:-

  • Stamp duty can be paid on the 1st working day after the lockdown period comes to an end in that district. If the Court office is closed on such date, then stamp duty shall be paid on the next date when the Court office is opened.
  • In case the stamp duty could not be paid on the documents executed during the lockdown on the 1st working day after the lockdown period comes to an end, then concerned party shall have the option of making application for adjudication under Section 40 of Maharashtra Stamp Act, 1958 to the District Collector of Stamps within 1 month from the date on which the lockdown ends (but within 1 year from execution) and in such case the District Collector of Stamps shall, with prior permission of Dy. IGR or Additional Controller of Stamps collect the deficit stamp duty without any penalty.
  • If the application is made after 1 month from the date on which the lockdown had ended, (but within 1 year from execution), the rights of District Collector of Stamps to decide such application on merits and rights of Dy. IGR or Additional Controller of Stamps to grant prior sanction to such application shall remain unhindered

Circular dated 27th April, 2020 regarding Expansion of facility of eRegistration of Agreement to Sale:

  • Department of Registration has allowed the facility of eRegistration of Agreement to Sale.
  • In order to avail the facility of eRegistration by the Developers, the condition of registration of minimum 500 documents was relaxed to:-
  • 20 Agreements for the Developers whose Agreement for Sale are in standard RERA format
  • 50 Agreements for other Developers.

Circular dated 19th May, 2020 pertaining to modifications in Circulars dated 19th April, 2020 and 27th April, 2020

  • As physical filing of Notice of Intimation was being stopped from 10th June, 2020 till end of August, 2020, citizens can avail facility of e- Filing;
  • In case of Sub-Registrar offices (SRO) registering more than 3000 documents per year, then till the end of June, 2020:
  • Registration of Will, Partition Deed, Release Deed, Gift to a Relative, Deed of Rectification being of less importance, Sub-Registrar can register these documents if there are no other documents available for registration;
  • SROs to provide information  about e-search facility to the citizens and encourage them to use this option instead of physical search
  • Citizens can check availability of documents, make application and pay fees for obtaining property valuation report, certified copies of documents or Index-II by availing services under AapleSarkar online portal.
  • Citizens who have made the application and paid fees via AapleSarkar online portal can physically collect the certified copies/ property valuation report from the office.

Circular dated 9th June, 2020 regarding denial of physical registration of Leave and License Agreement

Physical registration of Leave and License Agreement is stopped from 10th June, 2020 till end of August, 2020. Citizens, however can avail the facility of eRegistration.

The Registration and Stamps Department provides document registration services to the people as per the Registration Act and collects revenue through stamp duty as per the Stamp Act. The department provides services of document registration and revenue collection and aims to effectively use modern technology to provide services of document registration and collection of stamp duty to the people using well defined procedures. Guidelines and reliefs provided by the Department are necessary considering the grave crisis we now live in.

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