News

Check out market updates

The Board of Revenue, Sindh, (BoR) has started collecting stamp duty

KARACHI, Aug 3: The Board of Revenue, Sindh, (BoR) has started collecting stamp duty on the transfer of plots in Defence Housing Authority (DHA) with retrospective effect from 1978 imposing heavy penalties on owners, sources in the stamp duty directorate said on Wednesday.

The massive recovery drive was initiated on July 1 after the directorate learnt that the DHA was issuing NOCs for transfer of plots without charging stamp duty.

The cases of non-payment of stamp duty on transfer of DHA plots were detected when the owners of plots approached the district city registrar for lease.

The cases were detected by the stamp duty inspector assigned to the registrar office to verify the amount of stamp duty paid in the cases presented for registration of property units and lease of plots.

To make maximum recovery of the stamp duty, the stamp duty directorate asked the DHA to provide details and history of plots within its jurisdiction which had been given NOC for transfer since 1978.

Penalty runs into millions

The sudden recovery of stamp duty in millions has baffled the present owners who had been issued notice to pay stamp duty with heavy penalty on all transfers made during the last 32 years.

In some cases, the amount of penalty runs into millions of rupees. The owners of plots thronged the stamp duty directorate seeking relief in heavy penalties. They were advised to file an appeal with the chief inspector of stamps.

The owner of a plot told Dawn at the directorate that he had been asked to pay penalty for non-payment of stamp duty on all the five transfers of the plot in DHA since 1988.

He said that he had bought only this year the plot which had changed hands five times — in 1988, 1995, 1996, 2000 and 2011.

The last owner was in a fix because while making the transaction he did not charge the stamp duty from the previous owner and the process of non-payment dated back to the first owner multiplying the amount of unpaid stamp duty. The sources said that the DHA was charging stamp duty on allotment of plots but not on transfers, which is mandatory under the Stamp Act.

The plot owners complained that the directorate had enhanced the rates of penalty for non-payment of stamp duty drastically. The rate of penalty had been one or two per cent of the value of the plot earlier, but it was increased to 15 to 50 per cent and up to 100 per cent in some cases apparently to boost revenue which had been in negative column for many years, they said.

The statistics released by the stamp duty directorate revealed that the directorate collected Rs3,493.4 million during July-May of 2010-11 against Rs3,040 million previously. This was for the first time the stamp duty revenue increased by Rs452.8 million this year, the directorate claimed.

Buyers pay transfer fee thrice

“The investors buying plots have to pay transfer fee thrice — to the DHA, the Cantonment Board of Clifton and the Board of Revenue, Sindh, which calls it stamp duty,” said Raja Mazhar, senior vice president of the Clifton and Defence Association of Real Estate Agents.

The buyers of plots in DHA and Clifton were being panalised for no fault of theirs as they had always paid transfer fee on plots, he said. He accused the DHA, CBC and BoR of minting money on different pretexts and in different names at the cost of genuine buyers of plots or investors.

He said that the move by the BoR would seriously undermine the already deteriorating real estate business in the country. He added that the real estate agents had already started thinking to shift their capital to Malaysia which was thriving as a real-estate hub after the crash of the Dubai real estate market.

DHA charges Rs90,000 for membership

An official of the DHA told Dawn on condition of anonymity that the housing authority did not charge stamp duty on transfers of plots and the same was payable only when the owner applied for B-lease (permission to construct) at the district registrar office.

However, full stamp duty is charged on the value of the property at the time of registration of sales or purchase transaction at the district registrar office.

The Association of Clifton Defence Real Estate Agents confirmed that the stamp duty did not apply to transfer of plots, which always took place between members of the DHA. “To buy a plot in DHA it is essential to be a member of the authority which charges Rs90,000 for membership,” said a representative of the association.

Discuss, analyse & share your views (kindly avoid sharing your email & contact number for your safety)