Smaller Firms Seek Rs 5K Stamp Duty for Property Transfers Among Shareholders, Cite UP’s Intra-Family Relief

New Delhi, Jan 28 (KNN) Smaller firms planning to close down their business want states to allow transfer of property among its shareholders by paying Rs 5,000 stamp duty on the lines of Uttar Pradesh (UP) government's recent decision to allow intra-family transfer of commercial and industrial properties through gift deeds of upto Rs 5,000.

In a major relief to small businesses in UP, the government recently allowed the transfer of commercial and industrial properties among family members through gift deeds of a maximum value of Rs 5,000. The move was an extension of the benefit given to agricultural and residential properties.

"If a family owns a property and in case it is being divided or transferred among its members, the UP government has allowed it to be done on a stamp paper of Rs 5,000. The same treatment should be extended to properties held by small companies when the shareholders want to close the firm and transfer the properties," said Dinesh Singhal, Managing Director at Meerut-based Kanohar Electricals Ltd.

He stated that such a move would add to the ease of doing business and cut down complexities involved in shutting down a business.

Endorsing concessional transfer fees for properties held by small firms, VK Agarwal, Managing Director of Shashi Cables and former President of the Federation of Indian Micro and Small & Medium Enterprises (FISME) said that property related stamp duty and registration charges are prohibitively expensive in India which fuels black money generation.

"Smaller private companies should be charged lower property transfer fees when assets are divided among shareholders. The government could consider a graded fee structure—minimal for immediate family members and maybe slightly higher for other shareholders. This will lower the burden on small businesses," he said.

Agarwal also called for a flexible approach by the government in transfer of industrial plots and their objective should be to promote industrial growth instead of worrying about original allottees making some money while transferring the ownership.

Notably, the UP government recently announced a six-month remission of registration fees on specific categories of lease deeds, offering temporary relief to lessees across the state. Under the notified schedule, the registration fee has been capped based on the average annual rent and the tenure of the lease.

The remission applies to registration fees chargeable on lease deeds under Article 35 of Schedule 1-B of the Indian Stamp Act, 1899, as amended for Uttar Pradesh. However, the benefit does not apply to toll or mining lease agreements, which have been expressly excluded.

(KNN Bureau)