Overview
As envisaged in the IT Policy of 2023[1] (2023 IT Policy), Maharashtra Government, in accordance with the powers vested in it under Section 9 of the Maharashtra Stamp Act on February 1, 2024[2], issued the much awaited notification (2024 Notification) on full or partial waiver of stamp duty available to eligible new and expansion diversification units or projects, relating to Information Technology (IT), Information Technology Enable Services (ITES), Animation, Visual Effects, Gaming and Comics (AVGC) units, Data centres and Emerging Technology Units, (collectively IT/ITES Unit). The 2024 Notification is valid from June 27, 2023, to June 26, 2028, (both days inclusive) or for the currency of the 2013 IT Policy.
Important definitions of 2023 IT Policy referred in 2024 Notification
- Zone I Area – Municipal Corporation’s in Mumbai Metropolitan Region and Pune Metropolitan Region.
- Zone II area – Areas other than those in Zone I & No Industry Districts, Aspirational Districts & Naxalite affected area.
- Existing IT & ITES/ AVGC Unit – An IT (Software)/ ITES/ AVGC unit set up by an entity at a given location, which is in production/ operation on or any time prior to the commencement of 2023 IT Policy or a unit which has availed incentives (excluding Stamp Duty) under any of the earlier IT & ITES Polices.
- New IT & ITES/ AVGC Unit – An IT (Software)/ ITES/ AVGC unit, set up by an entity, which commences production/ operation at a given location after the commencement of the 2023 IT Policy and during the validity of the 2023 IT Policy and that it is not formed as a result of re-establishment mere change of ownership, change in the constitution, reconstruction or revival of an Existing/ Defunct/ Closed/ Sick Unit.
- IT Park – The standalone building/ premises having built up area of more than 20,000 sq. ft., with or without additional FSI, TDR, will be defined as an IT Park.
- Expansion/ Diversification Project [3] – If an Existing Unit makes minimum 25% additional fixed capital investment in IT & ITES/ AVGC activity on or after commencement of the 2023 IT Policy, then such a project will be considered as Expansion/ Diversification Project.
Key Highlights
Stamp Duty Exemption:
Conditions/ Eligibility Criteria for availing stamp duty exemption:
- No refund shall be granted if full or proper stamp duty has already been paid by any of the IT/ ITES Units, prior to the date of publication of 2024 Notification.
- Submission of NOC from the Competent Authorities of Industries Department is mandatory for IT/ ITES Units, seeking stamp duty exemption under the 2024 Notification, to verify whether the concerned unit has availed or not availed stamp duty waiver under any other policy/ scheme of the Government.
- The IT/ ITES Unit failing to start the activities (for which reduction or remission of stamp duty is granted under the 2024 Notification) or committing breach of any of the conditions of the 2023 IT Policy shall be liable to pay stamp duty and penalty, as if, there was no reduction or remission from the beginning.
- The stamp duty benefit under the 2024 Notification shall not apply to the instrument or documents of transfer of acquired land or any type of movable or immovable property by way of lease or conveyance or assignment of lease rights or sale certificate executed between eligible IT/ ITES unit and the subsequent unit under the 2023 IT Policy.
- Further transactions between the eligible IT/ ITES unit and the subsequent or the next unit under the 2023 IT Policy shall not be eligible for remission or reduction in stamp duty under the 2024 Notification. Accordingly, unit to unit transactions shall not be eligible for remission or reduction in stamp duty under the 2024 Notification.
New additions under the 2024 Notification:
- Any IT/ ITES Unit shall be eligible to avail stamp duty exemption under the 2024 Notification only for premises with valid Commencement Certificate or RERA Approval from the concerned Planning Authority or Competent Authority.
- Any IT/ ITES Unit in production or operation, shifting from one location to another and if it has already availed stamp duty exemption earlier will not be eligible for stamp duty exemption under the 2024 Notification.
- 2024 Notification clarifies that to be classified as an Expansion or Diversification Unit, the concerned unit should make on or after commencement of the 2023 IT Policy, minimum 25% additional fixed capital investment in IT & ITES/ AVGC/ Data centres and Emerging Technology activity.
Procedure for availing stamp duty exemption under the 2024 Notification
- The IT/ ITES unit, eligible to claim stamp duty exemption under the 2024 Notification, must obtain a Letter of Intent (LOI) for the concerned IT/ ITES activity from the Directorate of Industries;
- After obtaining the LOI, such eligible IT/ ITES unit must obtain a no objection certificate from the Competent Authority of Industries Department, certifying (post verification) that the unit under consideration has not availed any stamp duty exemption under any other policies of the Government of Maharashtra issued in this behalf (DOI NOC);
- After obtaining the DOI NOC, the eligible IT/ ITES unit should make an application to the concerned Collector of Stamps, for adjudication of the instrument (in respect of which it proposes to claim stamp duty exemption);
- Pursuant to the adjudication application, if the concerned Collector of Stamps is satisfied that the eligible IT/ ITES unit meets all the requirements (for grant of stamp duty exemption) specified in the 2024 Notification, then it will issue an order granting the remission/ exemption of stamp duty (Adjudication Order); and
- The Eligible IT/ ITES Unit must thereafter make stamp duty payment, as per the Adjudication Order, on the instrument on which the stamp duty exemption/ remission has been availed and present the instrument for registration (if required) before the concerned Sub-Registrar of Assurances, along with a copy of the Adjudication Order.
Conclusion
The 2024 Notification is a welcome step towards the growth of the IT sector in Maharashtra. From a perspective of micro analysis, there are still certain grey areas in the 2024 Notification, which require further clarification, for instance, even though the 2024 Notification has introduced the concept of Expansion/ Diversification Projects,it does not provide clarity on what is comprised within the meaning of ‘additional fixed capital investment’ and whether purchase of a land for expansion/ diversification of the concerned IT/ ITES Unit could be treated as a fixed capital investment. However, from a macro analysis perspective, the 2024 Notification provides momentum to the already existing prominent market players and a founding ground for the entry of new participants in the IT industry and paves the way for making Maharashtra the technology capital of India.
For further information, please contact:
Jinal Mehta, Partner, Cyril Amarchand Mangaldas
jinal.mehta@cyrilshroff.com
[1] Government Resolution No. ITP-2021/CR-170/Ind-2, dated June 27, 2023,
[2] No. Mudrank-2023/ UOR. No. 20/CR. 602/M-1 (Policy)
[3] It may be noted that term ‘expansion or diversification unit’ has the same meaning under the 2024 Notification.
