Kerala: Stamp duty eased, not for companies

THIRUVANANTHAPURAM: Finance minister Dr Thomas Isaac has virtually rolled back his decision to impose three percent stamp duty on all partition deeds but has still found a way to tax wealthier families by introducing a new stamp duty of five percent on company transactions. The Finance Bill 2016, which was passed in the Assembly on Monday, has restored the stamp duty ceiling of Rs 1000 on all partition deeds up to five acres.

All family transfers above five acres will be charged a stamp duty of one percent of the value of the land (fair value + 50 percent of the FV). However, to prevent the trend among wealthy families to conduct such family settlements by forming companies, the Finance Bill has imposed a five percent stamp duty on ‘company transactions’. Till now, there was no stamp duty on company transactions. Sources in the Finance Department said that it had been found that prime properties in Ernakulam district were being transferred in such a manner. Big plantations have long been avoiding the stamp duty burden by carrying out family transfers by forming companies; both the original holder and the inheritor form companies and then they amalgamate.

The finance minister, while defending his original decision, said that inheritance was the primary factor that engendered inequality. “This is why all socialists, including utopian socialists, have taken a strong stand against inheritance,” Isaac said while replying to the discussion on Kerala Finance Bill in the Assembly on Monday The finance minister move to remove the ceiling of Rs 1000 stamp duty was based on the argument that the windfall of development projects, which was only going to increase in the coming years, flowed into the hands of property owners. “The idea was to tap this windfall,” a top Finance Department source said.

GREEN TAX: The finance minister said that the ‘green tax’ on old vehicles would not be applicable to KSRTC buses. “The Transport Department will issue a notification exempting KSRTC buses from the tax,” Isaac said. FAT TAX: The minister clarified that fat tax was not applicable for all cooked food in branded restaurants. Fat tax will be imposed only on burgers, pizzas, tacos, doughnuts, sandwiches, burger-pattys, pasta, and bread-filling sold by restaurants having a brand name or a registered trademark.