Maharashtra to lower stamp duty on loan deals

The Maharashtra government has decided to reduce stamp duty on all loan agreements to 0.1 per cent from 0.25 per cent it had prescribed earlier.

To corporates' relief, it is also reducing the ceiling on stamp duty on loan agreements to Rs 5 lakh from Rs 10 lakh.

The decision follows representations from several quarters, including Indian Banks' Association (IBA), arguing that 0.25 stamp duty on loan agreement is exorbitant.

Stamp duty is a type of tax paid for a transaction performed by way of a document or instrument under the provisions of state stamp Acts and the Indian Stamp Act, 1899. Following the reduction, all corporate and retail borrowers will have to pay Rs 100 as stamp duty per Rs 1-lakh of loans availed.

Maharashtra accounts for nearly 30 per cent of all loans disbursed in the country. The total credit offtake in the country in 2005-06 is expected to be around Rs 3,00,000 crore. Additional revenue generation from this levy for the state government will be about Rs 100 crore a year.

The state government has also agreed to forgo stamp duty on agreements relating to sale or purchase of government securities. It, however, declined to sacrifice stamp duty revenue on sale and purchase of corporate paper, banking sources said.

IBA, Fixed Income Money Market and Derivatives Association of India have been advised to seek the opinion of a committee set up by the government for making Mumbai a regional financial centre.