In its effort towards developing a paperless system, the Maharashtra state administration has proposed to phase out the physical stamp paper of Rs 100- and Rs 500 denominations. The move is expected to save costs on staffing and security and reduce the possibility of fraudulent documents. (Maharashtra Govt Proposes Elimination of Physical Stamps Papers)
The tax department has recommended replacing the existing stamp paper requirement with mandatory franking for all legal documents. According to the proposed rules, stamp duty payment of more than Rs 10,000 should be made through franking. However, stamp duty less than Rs 10,000 can still be paid through stamp paper.
Stamp papers were reduced in the state after the Telgi scam was discovered in the early 2000s. Currently Rs 100 and Rs 500 stamp papers are used for affidavits submitted for government programs like MHADA houses, crop insurance and birth/death certificates.
According to a tax department official, the existing system involves significant expenditure and labour. Printing on paper requires security and a special storage system. Additionally, commission paid to sellers or agents costs the government more than Rs 50 crore.
The government aims to become paperless and save money by eliminating physical paperwork. However, this would require an amendment to the Maharashtra Stamp Act. Many states, especially Gujarat, have already abolished physical stamp sheets. The decision of the Gujarat government was challenged in the court. But the court ultimately sided with the government. Interestingly, Gujarat and Karnataka have entrusted the work of franking to private vendors.
The tax department fears opposition from stamp paper sellers. But it also says that this step is urgently needed. They believe that they have a strong structure in place for online payment of stamp duty using franking services.
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