Gujarat chief minister Narendra Modi has written to Prime Minister Manmohan Singh on another issue related to “federalism”, this time on a provision in the union budget.
Modi’s letter states that the proposal to impose 1% Tax Deducted at Source (TDS) on payment towards registration of immovable property will cause delays in the processing of documents, leading to adverse effects on the realisation of stamp duty on transactions, a domain of state governments. Modi sought the PM’s intervention to withdraw the proposal which comes into effect from October 1, 2012.
The budget has proposed that a registering officer will not record the transfer of any immovable property — if the transaction is above R50 lakh in urban agglomerations and Rs. 20 lakh in any other areas — unless the buyer furnishes proof of deduction and payment of TDS. The rationale for the move— collection of tax at the earliest and have a reporting mechanism of transactions in the real estate sector.
“Since the proposed procedure involves proof of deduction and payment of TDS, it would complicate the entire procedure and result in delayed processing for registration of the documents. Dealing with two separate authorities for registration of documents would add to the problems,” states Modi’s letter. “Needless to say, it will affect the realisation of Stamp Duty, which is an important part of the state’s revenues.”
He said no “prior consultation” was done with states on an issue that affects “a state’s finances in a big way”. He also said, “To ensure its own income, the government of India has, once again, overlooked our federal arrangements.”
Modi had, along with other CMs, been active in running down the NCTC as “anti-federal”. He has also alleged discrimination against states — particularly those ruled by non-Congress parties — at the hands of the Centre and had written to the PM against giving police powers to the Railway Protection Force. The BJP has raised the issue of federalism in the recent past, be it in the context of NCTC or the Bill to create Lokayuktas in the states.