Entries from April 2008 ↓

Stamp duty payment to be made online

Entrepreneurs will soon be able to incorporate a company in India sitting anywhere in the world without having to face red tape. The government is all set to introduce a centralised electronic stamp duty payment and online vetting of charter of new companies, irrespective of the states where they are set up.

Doing away with the need for a physical interface between the entrepreneur and a government official will eliminate occasions for corruption too.

Now, physical presence at the registrar of companies is essential for stamp duty payment in the state of incorporation and vetting of the company’s charter. The Centre has already started talking to state governments to tackle legal issues related to amending the Stamp Act of states and administrative issues related to duty payment. Being a state subject, implementation of any decision related to stamp duty at the national level needs the concurrence of all state governments.

The move will not, however, lead to uniform stamp duty and the proposed online payment system will manage accounting for varying duty in different states. The system would generate electronic stamp papers, on which the entrepreneur has to file affidavits using digital signature. The existing online filing system only provides for filing statutory documents like annual reports but not for starting a new company.

Real Estate Developer liable to Service Tax on Residential Construction

Authority for Advance Rulings vide a ruling pronounced on 7th April 2008 has ruled that a Real Estate Developer who is booking, constructing and selling residential units on land owned by him is liable to service tax.

  • Though the rulings of the Authority are binding only on the applicant and the service tax department; but since the issue has been settled in favour of service tax department; all the Builders and Real Estate Developers who are not paying service tax on construction of residential flats and units are going to be slapped the demands of service tax. Majority of the Builders are neither charging nor paying any service tax on construction and sale of residential flats. The costs of residential flats and units are also going to witness a hike due to service tax liability. This may lead to a further slowdown in Real Estate market.
  • The applicant is a developer of residential housing projects in Gujarat. As per the proposed activities No.1 & 2, the residential units will be constructed either on its own or through a contractor and the residential units so constructed will be sold to third parties. The applicant will book the residential unit after taking a booking amount and the total cost of the residential house will be specified to the buyers at the time of booking.
  • The proposed activities no. 3 & 4 consist of sale of plots of land inside the complex to the prospective buyers who will also enter into works contract with the applicant for the construction of residential units. Under the proposed activity no.4 the applicant will for the purpose of executing the contract with the buyer enter into works contract with Contractors.