Opinion Stamp of confusion

There is a draft land titling bill,with many desirable features. Comments have been invited on the draft...

New DelhiJuly 8, 2010 05:39 PM IST First published on: Jul 8, 2010 at 05:39 PM IST

There is a draft land titling bill,with many desirable features. Comments have been invited on the draft,and the last date for submissions is July 10. Here are a few randon quotes from the Bill:

Among other things,the Land Titling Authority will “ensure that the facilities of auto-calculation of due stamp duty….”,the Director of the Registry will “verify and satisfy himself/herself whether any stamp duty…”,”the Director,Property Valuation shall ensure that the computer software and database to be maintained,shall enable auto-calculation of due stamp duty…” and “Notwithstanding anything contained in the Indian Stamp Act,1899 or any other law for the time being in force,an application for title,transfer or a report on the transaction made in accordance with Chapter VIII of this Act shall be considered to be an instrument for the purposes of levy of stamp duty under that Act.”

Contrast this with the report of the 13th Finance Commission:

“Specifically,stamp duty,taxes on vehicles,taxes on goods and passengers and taxes and duties on electricity should be subsumed into the GST,” and “The real estate sector (both residential and commercial) should be included in the tax base and stamp duty levied by State Governments should be subsumed into GST.”

Of course,13th Finance Commission has a caveat.

“However,we are aware that two essential elements of the model have not yet been formally discussed by the states and consensus needs to be built before they are adopted. These are the inclusion of stamp duty in the GST tax base to enable the taxation of real estate and the use of a single rate in the GST framework.”

Factually,this is correct. But while stamp duty abolition may not have been “formally” discussed with States,it has been on the indirect tax reform agenda since at least 1993. Yes,there are perceptional (this is perceptional rather than real) fears of revenue losses by States. And yes,there are real issues of revenue losses by local bodies and devolution within States.

But a GST without elimination of all these taxes and levies isn’t a real GST at all,which is why stamp duty abolition has been on the reform agenda. Are the authors of the draft land titling bill not aware of this agenda?

We have to work with States to evolve this consensus. But pending that,why does the draft bill categorically assume that stamp duties will continue?