TN resolves stamp duty ambiguity for restructured power utilities

CHENNAI:
The Inspector General of Registration, Tamil Nadu, has resolved a lingering ambiguity over whether a decade-old stamp duty exemption applies to the successor entities of the state's power distribution utility, following its 2024 restructuring. 

A circular issued on Wednesday confirms that Tamil Nadu Power Distribution Corporation Limited (TNPDCL) and Tamil Nadu Power Generation Corporation Limited (TNPGCL) will retain the exemption, invoking Section 8G of the Indian Stamp Act, 1899, which waives stamp duty on property transfers by government entities in cases of strategic sales, disinvestment, demergers or liquidation.

The exemption traces back to a 2012 government order that waived stamp duty and registration fees on gift deeds through which private developers, typically applicants for group housing or commercial complex approvals, transfer land to the utility for building electricity substations. That order applied specifically to Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO), the entity's name before restructuring.

The ambiguity arose after TANGEDCO's corporate split, notified in the Tamil Nadu government gazette in August 2024, under which the utility was trifurcated into wholly owned subsidiaries of Tamil Nadu Electricity Board Ltd. TNPDCL took over the renamed distribution, billing and customer support functions, while TNPGCL was carved out to handle fossil-fuel and gas-based power generation. With TANGEDCO's original legal identity dissolved, registering officers had no explicit guidance on whether gift deeds in favour of the new entities still qualified for the tax concession.

The circular settles the question. It notes that TNPDCL and TNPGCL were formally declared "government companies" under the Companies Act, 2013, via a gazette notification in March 2024 — a status that underpins their continued eligibility for the exemption under Section 8G.

The office of the Inspector General has directed all district registrars and sub-registrars across the state to apply the updated guidance when processing gift deed registrations in favour of the two companies.