Maharashtra cabinet clears changes in Stamp Act

Maharashtra cabinet clears changes in Stamp Act

Sanjay JogUpdated: Wednesday, December 08, 2021, 11:22 PM IST
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The state cabinet, chaired by Chief Minister Uddhav Thackeray approved the amendment to the Maharashtra Stamp Act, 1958, on merger, demerger and amalgamation. The stamp duty payable under the Insolvency and Bankruptcy Code for the transactions of merger, demerger and amalgamation has now been brought on par with the amount imposed for documents under the Company Act and the Banking and Regulation Act, 1949. The maximum stamp duty payable for merger, demerger and amalgamation documents under the Insolvency & Bankruptcy Code will now be Rs 50 crore, as done in the case of documents under the Company Act and the Banking and Regulation Act, 1949.

A senior minister told The Free Press Journal, “The revenue department’s move to amend the Maharashtra Stamp Act will help boost the merger, demerger and amalgamation and also increase the state’s revenue. The decision was taken as the government has started receiving cases under the Insolvency and Bankruptcy Act of companies gone bankrupt and under liquidation and their merger, demerger or amalgamation have been cleared by the NCLT, NCLAT or the high court. Earlier, the government would charge the stamp duty for merger, demerger and amalgamation documents under the formula of 10 per cent of share value, 5 per cent of assets or 0.07 per cent of the total market value whichever was higher. The same formula will now be applicable for mergers, demergers and amalgamation under the Insolvency and Bankruptcy Code, whereby stamp duty will be maximum of Rs 50 crore.”

He said that the proposed amendment would be applicable to big and small companies that had gone bankrupt and their merger, demerger and amalgamation had been cleared by NCLT, NCLAT and the high court.

A revenue department officer said, “For instance, under the Company Act or the Banking Regulation Act, the merger and amalgamation of a steel company with another major undertaking would have attracted 5 per cent stamp duty for assets of Rs 5,000 crore, which means Rs 250 crore. With the proposed amendment, such transactions will now attract stamp duty up to Rs 50 crore” He further added that it has become imperative to change the order of the NCLT or the Board for Industrial and Financial Reconstruction, as the case may be, sanctioning the merger, demerger or amalgamation scheme.

Therefore, the government will amend the relevant sections of the Maharashtra Stamp Act, 1958.

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