December 21, 2005
In an earlier post I had commented on the implications of the interpretation of the Maharashtra stamp Act. Today the Prime Minister himself has intervened to ask the Maharashtra government to roll back the amendments to the Maharashtra Stamp Act that allowed the government to tax stock transfers.
December 13, 2005
Its like a cheesy sequel. In the past month or so the news has been filled with stories of the return of venture capital and private equity to India. The latest news is Intel’s plans to up its spend in India to $1 Billion includes a $250 million venture capital fund. This is on top of the $100 million that they invested over the past 7 years in 40 start-ups in India.
December 7, 2005
The Maharashtra government is of the view that stamp duty is payable on direct security deals and has asked bond houses to pay up stamp duties for the past 10 years. The arrears could be as high as Rs. 10,000,000,000.
In deals that take place through a broker, stamp duty is charged on the broker contract, but where a bank and a bond house cut a deal directly there is no formal contract – just a deal confirmation note. The government wants to treat the deal confirmation note on par with the broker contract and charge stamp duties on it.
Apart from setting an unhealthy precedent, this decision if allowed to prevail could have consequences across the board. For some time now, sales of goods that take place under an agreement to sell followed by a subsequent acknowledgement of receipt have been held not to attract stamp duties on the sale because there is no document under which the sale take place which could be chargeable to stamp duties. Deal confirmation notes operate on exactly the same principles and should be allowed to remain outside the stamp duty net.