In a significant move aimed at providing financial relief and simplifying property transfers within families, the Government of Karnataka has broadened the scope of its stamp duty exemption policy. The state's Revenue Department has issued a crucial circular that extends the existing stamp duty relief on gift deeds executed among family members to now encompass commercial and industrial properties, in addition to residential ones.
What Does the New Circular State?
The directive, officially numbered RD 43 LGP 2024 and dated March 11, 2024, was issued by the Commissioner of the Survey, Settlement, and Land Records Department. It serves as a clarification and expansion of the earlier notification (SO 78) from February 20, 2024. The core instruction mandates all sub-registrars across the state to exempt stamp duty on gift deeds involving the transfer of property between specific family relations, regardless of the property type.
This policy update effectively removes a major financial barrier for families looking to consolidate or redistribute business assets, shops, offices, factories, or warehouses as gifts. Previously, such transactions for non-residential properties would attract a substantial stamp duty charge, which could run into lakhs of rupees depending on the property's value and location.
Defining "Family Members" for the Exemption
The stamp duty waiver is not universal for all gifts but is strictly limited to transfers among a defined set of close relatives. The circular specifies that the exemption applies only to gift deeds executed between the following individuals:
- Spouses
- Parents and their children
- Grandparents and their grandchildren
- Siblings
This clear definition aims to prevent misuse of the exemption for non-familial commercial transactions while ensuring genuine family-based asset transfers are facilitated without a tax burden. The requirement for the gift to be without any consideration (free) remains paramount.
Implications for Karnataka's Real Estate and Business Landscape
The expansion of this stamp duty relief is poised to have multiple positive effects on the state's economy and administrative efficiency.
First and foremost, it provides substantial financial savings for families involved in business or those holding industrial assets. A family wishing to transfer a commercial shop or an industrial plot from a parent to a child can now do so without the added cost of stamp duty, making succession planning and asset management more efficient and less costly.
Secondly, this move is expected to boost documentation and formal registration of such property transfers. By eliminating the duty, the government incentivizes families to use the official registration channel, thereby improving the clarity of property titles and reducing potential future disputes. This enhances the ease of doing business in the state by ensuring cleaner ownership records for commercial and industrial assets.
Furthermore, the circular brings uniformity and clarity to the registration process. By instructing all sub-registrars to uniformly apply this exemption, it eliminates ambiguity and ensures the benefit is consistently available across all districts of Karnataka, from Bengaluru to Belagavi.
In conclusion, the Karnataka government's decision to include commercial and industrial properties under the stamp duty exemption for family gift deeds is a progressive step. It aligns with broader goals of reducing transaction costs in the real estate sector, supporting family-run businesses, and encouraging the proper legal documentation of asset transfers. This policy will likely be welcomed by business families and individuals looking to manage their property portfolios within the family framework efficiently.
