Stamp of reform

Updated: Feb 1 2006, 05:30am hrs
The desirability of low rates of duty for officially registering transactions is not in dispute. So also the desire not to have undue variations in such duties between states. The RH Patil committees recommendation for a push to have a uniform rate across states for debt instruments is only the latest reminder in this context. There is already a broad agreement between states, announced during Mr Chidambarams previous tenure as Union finance minister in the 1990s, for moderate rates, coupled with proper valuation procedures, across the board. Property transactions were the core of that agreement, but the consensus that moderation makes for more was general. One advantage of a countrywide switch to Value-Added Taxation (Vat) on a politically-agreed schedule as we have been doing is to ease such a process. Stamp duty is a state subject in our Constitutional division of powers and any move towards uniformity, and on the lower side, has to have a continuing political consensus. And not only as a matter of practicability; a healthy federalism requires that these initiatives come from below, rather than be imposed from above.

Reducing duties is only one aspect of a desirable process of reform. The government of Maharashtra, for instance, had in its previous Budget decided to move away from the system where stamp duty on the stock or commodity market is collected from either broker or investor. It intended to enter into arrangements with the exchanges and trading platforms concerned, besides authorising designated banks and financial institutions to sell stamps and act on behalf of the government through a computer-based network. A check to match words to action apart, this is the sort of thinking which should be coming from all states. It is a pity that so many years after the Telgi stamp scandal erupted, it is only now that the Union government is firming plans to introduce electronic stamping facilities across the country, with payments to be done (still only envisaged) through banks or credit cards. It is desirable for the Union government to show more energy and initiative on this and allied questions and we look forward to some of these being readied in time for the coming Budget.