Ravindra Jaiswal, the Minister of Stamp and Registration, revealed that builders from Delhi and Haryana were taking advantage of this loophole by registering their power of attorney in Noida.

LUCKNOW: The registration of a power of attorney that authorizes someone outside the family to sell a property will now be subject to stamp duty based on the prevailing circle rate.

The Uttar Pradesh Cabinet has approved this rule in response to numerous cases of stamp duty evasion that have recently come to light. In these cases, builders were exploiting the loophole by persuading farmers to sell their land through a power of attorney, thereby avoiding payment of stamp duty.

According to Stamp and Registration Minister Ravindra Jaiswal, builders from Delhi and Haryana have been taking advantage of this loophole by registering their power of attorney in Noida.

Several cases of this nature have been observed in Ghaziabad and Noida. In fact, four months ago, when this issue came to light, we suspended four Sub-registrars from Ghaziabad. However, they approached the court, which granted a stay on their suspension," stated the minister.

Elaborating on the modus operandi, the Minister explained that the builder acquires a power of attorney from a farmer, granting him the authority to sell the farmer's land and collect the payment on the farmer's behalf.

The registration of a power of attorney for a mere cost of Rs 10, Rs 20, or Rs 50 allows the builder to proceed with the sale of the land. By paying even as low as Rs 50, the builder carries out the transaction, pays a portion of the amount to the farmer, and keeps the remaining sum. However, since no actual sale has occurred from the farmer to the builder, no stamp duty is paid for this transaction," the minister explained.

By circumventing the initial sale between the farmer and the builder, the government was facing significant losses. The Minister emphasized that it was difficult to ascertain the exact magnitude of the losses incurred by the government in this regard.

Under the new rule, if a power of attorney grants permission to someone to sell a property on behalf of the applicant, stamp duty will be applicable based on the circle rate of the land. However, this rule does not apply to relatives. Nevertheless, in such cases, a base charge of Rs 5,000 will be levied for the registration of the power of attorney.