Housing sector clueless on new leave & license notification

June 14: The Government of Maharashtra's recent decision to compulsorily register leave and licence agreements has resulted in utter confu...

June 14: The Government of Maharashtra’s recent decision to compulsorily register leave and licence agreements has resulted in utter confusion in the housing industry due to a “vague” June 8 notification issued by the state Revenue Department. This is so because though a hue and cry had been raised over the imposition of the new stamp duty rates on leave and licence agreements, the notification does not mention any change to that effect.

Housing experts say the notification though mentions a flat rate of Rs 1,000 as registration charges on all leave and licence agreements in the Brihanmumbai Municipal Corporation limits and Rs 500 in other areas of the state, no mention has been made on stamp duty rates applicable. In fact, the initial announcement made by the government on the rates of stamp duty has now been complicated by this notification.

Moreover, the notification states that the amendment will take effect from June 8, 2000, though the changes envisaged by the new Maharashtra Rent Control Act, 2000, took effect from March 31, 2000. The stalemate still continues to apply to those who have executed deals between this period, experts point out.

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Government officials also are clueless on the new notification, saying that an amended version will be issued soon to clarify matters. A gazette notification to this effect will be issued on July 12.

Experts also ass that with registration made mandatory on leave and licence agreements, the state will lose crores of rupees as revenue since the parties will bypass lease provisions with extendable leave and licence agreements.

Says Vinod Sampat, a stamp duty expert: “Now people will forego lease provisions and shift to extendable leave and agreements which will have a registration charge of maximum Rs 1,000. Earlier, in long term lease deals, the government used to get revenue as stamp duty was related to contract volumes.”

A release from the Estate Agents Association stated that due to this confusion, there are several agreements withheld in the sub-registrar’s offices. It added that this move will have an adverse impact on the inflow of foreign exchange by non-resident Indians, who buy flats and offices and let them out on a leave and licence basis. The statement says that as far as individuals are concerned, owners of premises are already saddled with multi-point taxation like municipal taxes, income tax, registration charges etc and this move will throttle the industry.

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The association points out that there is a clear distinction between lease and licence. Under a lease, an interest in property is created under the Transfer of Property Act and should be registered, whereas leave and license is a personal facility which does not amount to interest in the property.