The Government of Maharashtra passed the Maharashtra Stamp (Amendment) Act, 2021 (the ‘Amending Act’), which is effective from January 20, 2022. The Amending Act, amongst other things, has introduced the following key amendments to the Maharashtra Stamp Act, 1958 (the ‘Act’):

1.     Stamp duty for mortgages, pledges and hypothecation under Articles 6, 33, 40(b), 41 and 54 of Schedule I to the Act: The cap has been doubled from INR 1 million (approx. US$ 13,364) to INR 2 million (approx. US$ 26,731); and

2.     Prescription of maximum stamp duty for consortium of banks: If a mortgage, pledge or hypothecation under Articles 6 or 40(b) of Schedule I to the Act is executed in favour of a consortium of banks, the maximum stamp duty chargeable would be INR 5 million (approx. US$ 66,827). This provides some relief where multiple lenders advance loans to a borrower and the security created is common for such lenders. In such cases (prior to this amendment), the stamp duty for each instrument was equivalent to the standalone stamp duty multiplied by the number of lenders and without a cap, as a result of the judgment of the Hon’ble Supreme Court in Chief Controlling Revenue Authority v. Coastal Gujarat Power Limited coupled with the consequent opportunistic amendments to the Stamp Act in 2021. Please refer to our Client Alert dated February 25, 2021, in this regard, accessible here.

 Key Takeaway

If non-banking financial companies or housing finance companies are part of a consortium, they may not be able to avail of the cap prescribed, as the benefit is only available for a consortium of banks.