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The Bombay High Court recently made a ruling regarding stamp duty payments for members of housing societies undergoing redevelopment. The court determined that members do not need to pay stamp duty on their allotted permanent accommodation as part of the project. This ruling brings an end to a long-standing legal dispute that began in 2006 and is a significant relief to the real estate sector.
Previously, circulars had been issued which required a Permanent Alternate Allotment Agreement (PAAA) executed between the developer and society members to be stamped again, despite the development agreement already being stamped. However, the court has now set aside and revoked these circulars, stating that the stamp on the development agreement already includes the reconstruction of every unit in the society building, and therefore stamp duty cannot be levied twice.
In addition, the court has held that the reasoning behind stamp authorities levying duty on PAAA is flawed, as a society is essentially a group of its members and cannot exist without them. Furthermore, the acts of the society are determined by the will of its members. Therefore, PAAA in relation to the area that corresponds to what members already possess, as well as any additional area to which they are entitled by law, cannot be subject to stamp duty.
Stamp duty is a tax that is charged by the state government on the purchase or transfer of certain types of assets, including real estate properties such as residential properties. In Maharashtra, stamp duty is charged on residential transactions to generate revenue for the state government. The collection of stamp duty also helps to regulate and monitor real estate transactions in the state, as it provides an official record of the transfer of property ownership and helps to prevent fraud and other illegal activities.
A Permanent Alternate Allotment Agreement (PAAA) is a legal document used in the state of Maharashtra, India, in relation to the allotment of government land. The PAAA is an agreement between the government and the individual or entity to whom the land is being allotted, and it outlines the terms and conditions of the allotment. The PAAA may also specify the duration of the allotment and any conditions that must be met by the individual or entity to maintain the allotment.
This ruling will have significant implications for the real estate industry and society members involved in redevelopment projects. It provides clarity on stamp duty payments and eliminates the need for members to pay additional stamp duty on their allotted permanent accommodation. It is also a positive step towards reducing the financial burden on members undergoing redevelopment and should facilitate smoother and more efficient project completion. Overall, this ruling is a welcome development for the real estate sector in India.
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