Sanjay Balan
India still carries many laws from the colonial era. Some have been changed, some have been repealed, and some continue quietly because they bring revenue to the government. The stamp duty law belongs to this last category.
The Indian Stamp Act is a colonial-era fiscal law. It may have had some logic in British India, when the taxation system was very different. But today, independent India has income tax, capital gains tax, GST, banking trails, PAN, Aadhaar, TDS, digital payments and multiple reporting systems. In such a modern tax regime, why should citizens still be heavily taxed merely because they want to honestly document a private land transaction?
The usual legal defence is that stamp duty is a fiscal levy on the instrument and not directly on the property or income. But this is only the legal form. In practical and economic substance, stamp duty is a tax on private transactions. The document by itself has no value. It is taxed heavily only because it records a sale, gift, settlement, lease or other transaction. Therefore, when the duty is calculated on the value of the transaction, it is difficult to pretend that the citizen is only paying for a piece of paper.
This question becomes even more important in Andaman and Nicobar Islands.
There was a time when stamp duty here was around 1.5%. That was reasonable. It allowed people to register sale deeds, family settlements, partitions, release deeds and other land documents without feeling punished for coming before the Sub-Registrar. But now stamp duty has gone up to 6%. Add another 1% registration fee, and the total burden becomes nearly 7% of the land value.
On a land value of Rs. 50 lakh, government charges alone may come to around Rs. 3.5 lakh. This is not a nominal documentation charge. This is a heavy transaction tax.
The irony is that Andaman is already a land-scarce and heavily regulated Union Territory. Land transfer is not as simple here as in many other parts of India. Permissions, revenue records, land classification, diversion issues, tribal restrictions, forest concerns and administrative scrutiny already surround land transactions. After all this, when a citizen finally comes forward to lawfully register a document, the system imposes 6% stamp duty and 1% registration fee. This does not encourage legality. It discourages it.
There is another serious issue: circle rates.
Stamp duty is calculated not merely on the actual sale consideration but on the higher of sale value or notified circle rate. Therefore, if circle rates are unrealistic or higher than ground reality, the citizen is taxed on an artificial value. First, the rate of duty is high. Second, the value on which duty is calculated may itself be inflated. This is a double burden.
Circle rates are not divine figures. They are administrative valuations. They can be reviewed and rationalised. The land law framework itself provides for fixation of such rates. If circle rates do not reflect real market conditions, local realities, land use, accessibility, restrictions and actual transaction behaviour, then the Administration must revisit them.
The damage caused by high stamp duty is not limited to individual hardship. It affects the entire economy. When transaction costs are too high, people avoid registration, postpone family settlements, understate values, move part of the consideration into cash, or keep arrangements informal. This leads to outdated land records, mutation disputes, family litigation and avoidable civil cases. The State may collect more from each registered document, but many genuine transactions either do not come on record or come on record in a distorted manner.
A lower stamp duty encourages honesty. People are more willing to disclose real value. They are more willing to register family arrangements. Land records become cleaner. Litigation reduces. Banks get better title documents. Land moves more easily into productive use. Construction, renovation, local employment and allied economic activity also benefit.
This is not a radical idea. Across the world, many countries have either done away with stamp duty or made it nominal. New Zealand abolished stamp duty years ago. Even in India, the issue has been recognised. The Parliamentary Standing Committee on Commerce, in its 122nd Report on Ease of Doing Business presented in December 2015, recommended that stamp duty should be reduced to 2%.
If a Parliamentary Committee could recognise this problem in 2015, why should Andaman move in the opposite direction by imposing 6% stamp duty plus 1% registration fee?
Registration fee also needs reform. Maharashtra provides a useful model where registration fee is generally 1%, but for properties above Rs. 30 lakh it is capped at Rs. 30,000. In Andaman also, registration fee should be treated as an administrative charge with a reasonable ceiling, not as another open-ended tax on land value.
Family transactions also deserve special treatment. Gift deeds, release deeds, partition deeds and family settlements within close family members should either be charged nil duty or only bare minimum duty, as is done in many States. These documents prevent future disputes and help update land records. The State should encourage them, not make them expensive
The Administration should seriously consider restoring stamp duty to a reasonable level, preferably around the earlier 1.5%. Registration fee should be capped. Circle rates should be reviewed through a transparent, consultative and ground-based process. Local bodies, revenue officials, lawyers, deed writers, PRI representatives and citizens should be heard. Rates should reflect reality, not merely revenue expectation.
The larger issue is mindset. Land registration should not be seen only as a revenue collection opportunity. It is also a tool for clean land records, legal certainty, economic activity and social peace.Andaman needs a fair and practical land transaction regime. Reduce stamp duty. Cap registration fee. Rationalise circle rates. Keep family transactions either duty-free or at bare minimum duty. Encourage people to record the truth.
The Administration should think about this issue with a fresh mind. A modern Andaman cannot be built on a colonial mindset of taxing documents heavily. It must move towards a system where legality is affordable, honesty is encouraged, and citizens feel that the government is helping them formalise their rights, not penalising them for doing so.
(The writer Mr. Sanjay Balan, though retired from government service, he continues to blend governance insight, land-law expertise, and candid public commentary in service of Island development) (Note: Views expressed in this column are writer’s own)
