States lead the way in revamp of stamp papers

While the Central government is finalising the launch of dematerialised stamp papers in 10 cities across the country, Karnataka, Andhra Pradesh and Rajasthan have already taken the lead.

Officials involved in the dematerialisation process told Business Standard that following the Abdul Karim Telgi-led multi-crore stamp paper scam, Rajasthan has put in place a franking system, in which the stamp duty paid will be punched on the registration papers.

On the other hand, Karnataka and Andhra Pradesh have decided to restrict stamp denominations to Rs 20 while a receipt will be issued for payment of the remaining amount. "It is not too productive to counterfeit stamp papers of smaller denominations like Rs 10 or Rs 20 since the cost outweighs the benefits," said an official.

Officials said as per the dematerialisation system, which would be put in place towards the end of the year, users would be issued a unique code which could be checked by treasury and the registrar's office as they would be interconnected through a network of computers. The government is expected to finalise the central record-keeping agency for the project towards the month end.

Five players, including Punjab National Bank, Central Depository Services Ltd, National Securities Depository Ltd and a consortium of Wipro and Centurion Bank, are in the fray to develop the system.

The National Advisory Committee, headed by Congress President Sonia Gandhi, had also proposed doing away with stamp papers in the conventional form. Last year, the government amended the Stamp Act to allow the use of other forms of stamps.

However, a complete, across-the-country dematerialisation of stamp papers would be difficult, owing to a lack of access and infrastructure in the rural areas, officials said. "If we restrict it to the large cities, we may be able to check counterfeiting," said an official.

The finance ministry is discussing the matter with states but is leaving the option to the state governments to finally implement the system.