TN exempts payment of stamp duty on transfer of land in lieu of TDRs

C Shivakumar @ Chennai:

In a bid to promote housing for lower income groups, the state government has exempted payment of  stamp duty and registration fee for gifting of roads as well as transfer of land in consideration of Transferrable Development Rights (TDRs).

  

TDR is a mechanism where the government compensates the developer or owner of the land by entitling him with floor space index through a development rights certificate

  

A Government order was issued to this effect by C Chandramouli, additional chief secretary, Commercial Taxes and Registration Department.

This comes as ‘Gift Deed’, which is executed in favour of Chennai Metropolitan Development Authority for public purposes in the form of consideration of ‘Development Rights’ was not valid under the Transfer of Property Act, 1882.

The Act prevents a donor from receiving 'consideration’ in a Gift. The other hitch was the Government Order which stated that an instrument qualifies to be classified as ‘Gift’ or ‘Settlement’ if it is executed by a citizen only. As such real estate company is not entitled for the concession.

  

It is learnt that the government after consultation with Chennai Metro Rail Managing director and CMDA, member secretary has extended stamp duty and registration fee exemption to instruments executed for public purposes in favour of CMDA or CMRL even when there is a ‘Consideration’ in the form of TDRs involed.

  

The stamp duty and registration fee is now exempted to any instrument executed in favour of government or any local authority in the state where properties are given for any public purpose and to omit ‘citizens’ appearing in notifications.

  

S Ram Prabhu, secretary of Builders Association of India, has welcomes the move and said that it would benefit a developer who could use the Floor Space Index guaranteed by TDR and use it develop property in some other area.

Interestingly, TDR mechanism lacks legal sanctity like the new land acquisition act and there is no market for it. Prabhu said that Confederation of Real Estate Developers Association (CREDAI) is working on giving a legal sanctity to it.

 However, planners feel that the government has not amended the Town and country Planning Act to give legal sanctity to TDR as recommended by Justice Mohan Committee report. Unlike the new land acquisition Act, which has a right to compensation, the rules framed for TDR doesn’t have legal sanctity and is only for a period of five years. Planners feel that there is a need for to ensure that TDR can be tradable like a currency then only the exchange of TDRs could be made successful.

Factfile:

1. TDR is a mechanism where the government compensates the owner of the land by entitling him with floor space index through a development rights certificate after taking over his land.

2. Although TDR came into being after Second Master Plan was implemented by Chennai Metropolitan Development Authority, the biggest issue is there is no mechanism or provision on how to encash it or sell it.

3. Planners feel that TDR could be successful if it has a legal backing and a dispute redressal mechanism.

4. Unlike the new land acquisition Act, which has a right to compensation, the rules framed for TDR doesn’t have legal sanctity and is only for a period of five years.