HYDERABAD: Property buyers at bank and financial institution auctions may soon need to pay stamp duty based on transaction value as the Telangana government considers significant changes to the Indian Stamp Act and the Registration Act, aimed at reducing revenue losses, according to officials.
The government also plans to grant authority to the inspector general and commissioner of the registration and stamps department to annul fraudulent registrations, including double registrations. Proposed amendments are expected to be presented to the Telangana cabinet shortly.
Officials indicate that many auction property buyers evade stamp duty by presenting a ‘sale certificate’—a document banks submit to sub-registrars under Section 89 of the Stamp Act. Such certificates allow the sub-registrars to list the property details in Book 1, which affects the encumbrance certificate, even if the duty is unpaid.
This loophole has resulted in substantial revenue losses for the state government, amounting to hundreds of crores annually. Buyers have even resorted to legal action when sub-registrars reject their sale certificates.
“For over two decades, the Hyderabad Metropolitan Development Authority (HMDA) has been auctioning land, but properties are registered only after successful bidders pay 7.6% in stamp duty and registration fees. This issue primarily affects banks and financial institutions,” a senior official from the registrations department clarified.
Cancelling fraudulent registrations
An attempt to amend the Indian Stamp Act in 2021 was thwarted by the Centre, following advice from the Union Ministry of Finance to modify specific articles of the stamp duty instead of revising the entire Act. The government is now pursuing this approach.
The government is also set to amend the Registration Act of 1908 to enable cancellation of fraudulent property registrations based on forged documents, impersonation, or double registrations. This amendment requires the President’s approval, and states like Andhra Pradesh, Tamil Nadu, and Karnataka have already enacted similar measures.
Currently, once a property is registered with a sub-registrar, the state government lacks authority to annul it; only courts can declare such transactions invalid. The government seeks to empower the inspector general of the registration and stamps department to cancel fraudulent registrations either through complaints or on their own initiative.
Section 22-A of the Registration Act currently prohibits the registration of government, waqf, and endowment lands. The government plans to introduce Section 22-B to grant cancellation powers to designated officers,” another official stated.
