Circular No.40405/P2/2021, Amalgamation of Companies, 2024
The Office of the Inspector General of Registration, Chennai, issued Circular No.40405/P2/2021 dated 9 September 2024 to clarify stamp duty on property transferred through court or authority approved schemes for amalgamation or reconstruction of companies. Following the Madras High Court judgment dated 19 February 2024, registering officers must calculate stamp duty at two per cent of the market value of the immovable property and must not apply the alternative calculation based on the market value of shares, which the Court quashed.
What the circular governs
Circular No.40405/P2/2021 dated 9 September 2024, issued by the Office of the Inspector General of Registration, Chennai, concerns property transferred through schemes for the amalgamation or reconstruction of companies. It applies where the scheme has been sanctioned by the High Court, the National Company Law Tribunal or the Board for Industrial and Financial Reconstruction.
The circular gives registering officers instructions following the Division Bench judgment of the Madras High Court dated 19 February 2024 in W.A.No.758 of 2022.
Effect of the Madras High Court judgment
The Madras High Court disposed of writ petitions challenging an earlier Inspector General of Registration circular and related government orders. The circular records the following results:
- Inspector General of Registration Circular No.49282/P1/2018 dated 20 November 2018 was upheld.
- G.O. (Ms.) No.29 dated 1 March 2019 remains valid except for the part requiring comparison with 0.6 per cent of the aggregate market value of shares. That part was quashed.
- G.O. (Ms.) No.47 dated 19 February 2020 was held valid.
- Stamp duty may be collected at two per cent of the market value of the immovable property.
- Excess duty already collected from the writ petitioners must be refunded.
- Stamp duty paid in another State when presenting the amalgamation order or scheme must be credited against the duty payable in Tamil Nadu. Only any remaining balance may be demanded.
Instructions to registering officers
Circular No.40405/P2/2021 directs Sub Registrars, District Registrars and Deputy Inspectors General of Registration to follow these requirements:
- Apply reduced stamp duty of two per cent of the market value of immovable property transferred under a qualifying amalgamation or reconstruction scheme.
- Do not require stamp duty calculated at 0.6 per cent of the aggregate market value of the shares.
- Account for stamp duty already paid in another State and demand only the balance, if any.
Who may be affected
Circular No.40405/P2/2021 is relevant to companies transferring immovable property through an approved amalgamation or reconstruction scheme. It may also affect company representatives, property professionals and registering officers handling presentation or stamping of the relevant court or authority order.
This summary is generated from the source document to help you find what is relevant. The PDF above is authoritative. For advice on your own property, use LandLens One or speak to a qualified professional.
Common questions
How is stamp duty calculated for an approved company amalgamation involving immovable property?
Registering officers must calculate stamp duty at two per cent of the market value of the immovable property transferred under the scheme.
Can the registration office calculate duty using the market value of the company shares?
No. Circular No.40405/P2/2021 instructs registering officers not to apply the calculation of 0.6 per cent of the aggregate market value of the shares.
Will Tamil Nadu give credit for stamp duty already paid in another State?
Yes. Stamp duty paid in another State when presenting the amalgamation order or scheme must be taken into account, and only the remaining balance, if any, may be demanded in Tamil Nadu.
Which approving authorities are covered by the reduced stamp duty instruction?
The instruction covers schemes of amalgamation or reconstruction sanctioned by the High Court, the National Company Law Tribunal or the Board for Industrial and Financial Reconstruction.
