The Chennai chapter of the Confederation of Real Estate Developers’ Associations of India (CREDAI) has approached the Madras High Court challenging a Government Order issued on July 7, 2023, increasing the fee for registering a power of attorney executed in favour of a non-family member to sell an immovable property from a fixed amount of ₹10,000 to 1% of the market value of the property.
It has also challenged the increase in the fee for registering construction agreements from 1% to 3% of the cost of construction.
The First Division Bench of Chief Justice Sanjay V. Gangapurwala and Justice D. Bharatha Chakravarthy on Thursday ordered notice, returnable by January 5, to the Secretary of the Department of Commercial Taxes and Registration as well as the Inspector-General of Registration.
Senior counsel Vijay Narayan, representing CREDAI, told the Bench that the steep increase in the registration fees would have a severe bearing on the real estate industry which accounts for almost 10% of the country’s Gross Domestic Product and is the second largest source of employment.
He said the government had increased the fees arbitrarily, without consulting stakeholders.
Differentiating between stamp duty (in the nature of tax) and registration fees, Mr. Vijay Narayan said a fee should always be commensurate with the services rendered by the department concerned and it could not be used as a source of revenue for the government. However, in the present case, there had been a steep increase in the registration fees without any rationale or explanation whatsoever, he complained.
The G.O. merely states that the decision to revise the registration fees was taken since they remained unrevised for the last 20 years and the fees collected earlier were not commensurate with the services rendered by the department.
“The G.O. is at variance with the larger objective of providing affordable housing to people from all strata, including low-income and middle-income groups,” he said.
In his affidavit, CREDAI Chennai president S. Sivagurunathan said the confederation made a representation to the government on July 11, highlighting the difficulties that would be faced by the real estate sector because of the steep increase in the registration fees. He said many prospective development projects would collapse and the real estate market might come to a standstill.
