The boom in the real estate sector in Punjab has failed to push the stamp duty and registration fee collection in the state. According to the Comptroller and Auditor General (CAG) report, there was a decline in stamp duty and registration fee receipts from Rs 1,670.5 crore in 2005-06 to Rs 1,550.9 crore in 2009-10. The collections were far below the Budget estimates in 2009-10, by 23 per cent. Also, the percentage of receipts from stamp duty and registration fee to the total receipts in the state remained more or less stagnant at 10 during the period 2005-10.
The government stated in August 2010 that the main reasons for the decrease in revenue collection were the less number of registration deeds preferred by the public and the recession. However, according to CAG report there were evasions of stamp duty and registration fee on sale of immovable property on powers of attorney and due to non-registration of agreements for sale.
According to the report, the instrument of power of attorney attracts nominal stamp duty of Rs 300 and registration fee of Rs 50 in comparison to the deeds of conveyance whereupon the stamp duty and registration fee are leviable at Rs 5 and one per cent of the value of the properties. These instruments i.e power of attorney were effectively the deeds of conveyance. Since the attorney holders were given the power to sell, transfer or handover the possession of the properties to a third person, stamp duty and registration fee could have been levied and collected, had these instruments been registered as deeds of conveyance though passing of consideration was not mentioned. Also, NIC (National Informatics Centre) maintained software for registration activities, PRISM (Property Registration Information System Module), had several general and applications control deficiencies, resulting in manual interventions.
Besides, it also pointed out that there are compliance deficiencies like remission of stamp duty and registration fee on incomplete documents. Also, a few instance of short levy of duty due to non-adoption of appropriate collector rates also came into the notice of CAG during the report.
CAG pointed out due to non-compliance of statutory provisions, government instructions and lack of control over the registration activities, there were many cases of sale of fake stamps, inadmissible remissions of stamp duty and registration fee and evasion of duty through the instruments of general power of attorney which resulted in loss of stamp duty and registration fee.
In its recommendation and in order to check evasion by masses, it has recommended that the stamp duty act/rules be made to prevent the misuse of power of attorney given for sale of immovable property in line with provisions made by other states. Also, to provide internet facility between the banks and registering offices to prevent the sale of fake stamps, tampering, etc. It also recommended to expedite computerisation of registration, linking it with land records and replacing the existing application of PRISM which is rudimentary, insecure and incomplete in its coverage, utility and deployment of staff in accordance with the workload to ensure proper scrutiny of the instruments at the time of registration, after proper study on manpower planning is done.