Noida to recover revenue lost to stamp fee evasion

The Uttar Pradesh government has decided to recover lost revenue from thousands of companies which sold or bought immovable assets without paying the stamp fees.

The Uttar Pradesh government has decided to recover lost revenue from thousands of companies which sold or bought immovable assets without paying the stamp fees. The state government has directed the Noida authority to identify companies that own commercial, industrial or institutional businesses sold or bought after 2010 without payment of stamp fees.

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The move is expected to put an additional financial burden on the city’s shopping malls, schools, colleges, industrial units and offices run by various companies. The Noida authority has started identifying these companies and will submit a list to the stamp and registration department for further action.

“As per the directions of the state government, we have directed our staff to identify the properties sold or bought after 2010. We will submit the list to the stamp and registration department who will take further action in this regard,” Avinash Tripathi, officer on special duty, Noida authority, said.

As per government rules, if an immovable asset is sold or its ownership rights are transferred, the government charges five percent of the cost of the total asset as stamp fee. For instance, if a property worth ₹10 crore is sold or its ownership is transferred, then the buyer has to pay ₹50 lakh as stamp fee, officials said.

In October 11, 2010, the UP government issued an order stating that companies that are run by board members and own commercial, industrial and institutional assets (plots and building) do not need to pay stamp fee, officials said. To benefit from this 2010 order, many companies in Noida transferred ownership rights by changing its board members or changing the rules of the company and did not pay any stamp fee.

However, on February 4, 2020, the UP government quashed the 2010 order and also issued directions to the Noida authority to identify the companies which evaded the stamp fee causing huge financial loss to the state exchequer. The order also dictates that from now companies owning assets in Noida will have to pay five percent of the assets’ value in stamp fee if they transfer its ownership.

“The state government has also decided to recover the revenue which has been lost in transferring the ownership of assets from one person to another person,” a Noida authority official said. In Noida, the practice of selling immovable assets by first changing its board companies was common among many companies since 2010. However, now the government has realised that it is incurring huge financial losses as companies have been evading stamp fee.

The state ’s move to recover the lost revenue is expected to affect thousands of companies who have decided to approach the court for relief. “This decision is unjust and arbitrary and puts financial burden on those who purchased properties in the last 10 years. We purchased properties according to the rules that were prevalent then. After 10 years, how can the government suddenly put this financial burden on companies? We have written to the government to roll this decision back. If they will not withdraw this order, then we are ready to approach the Allahabad high court for relief,” Sudhir Srivastava, spokesperson, Noida Entrepreneurs Association, said.

“In cases wherein the transfer occurred in the last ten years recovering revenue will not be reasonable as the rule then was different. The court may give justice to affected parties,” PP Nagar, patron, Noida Bar Association, said.