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L&T to cough up 164 cr on stamp duty
If Telangana government goes by the rule book, Larsen and Toubro Limited (L&T) will have to cough up Rs 164 crore as stamp duty to the state government. A proposal to the effect was sent by officials to the government to examine the matter and take a final call.
Hyderabad Metro Rail project
Hyderabad: If Telangana government goes by the rule book, Larsen and Toubro Limited (L&T) will have to cough up Rs 164 crore as stamp duty to the state government. A proposal to the effect was sent by officials to the government to examine the matter and take a final call.
According to the officials, Congress government in the undivided state entered into agreement with L & T Metro Rail (Hyderabad) Limited for implementation of Hyderabad Metro Rail project. Later it was noticed that L & T (Metro Rail) Hyderabad Limited entered into agreement with Larsen and Toubro Limited. As per Article 6(B) of Schedule 1-A of Indian Stamp Act 1899, the agreement is liable for stamp duty at one percent (1%).
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With respect to documents related to agreements or memorandum of agreements (MoUs) for construction or development of immovable properties, a stamp duty of one percent can be collected on the sale consideration or estimated cost of development as declared by the parties in the document. L&TMRHL was created as the concessionaire to execute the Hyderabad Metro Rail project. It in turn entered into an agreement with the parent company L&T.
Since this comes under the category of developmental agreement, it entails 1% stamp duty on the total project cost, amounting to Rs 164 crores. It may be mentioned here that AP Public Works Department code exempts stamp duty for agreements entered between government and contractors for execution of works. However, there is no clarity on stamp duty liability of contracts entered by government with contractors and subsequent sub-contracts entered by them with other contractors.
Meanwhile, officials of Stamps and Registration department stated that government can waive off stamp duty in special cases to encourage parties that take up big projects. Telangana government could sit down and issue directions after which the department could release GO to waive off the duty, they said. However, they were clueless whether L& T was given relaxation in Metro Rail project.
By:Mahesh Avadhutha
