Stamp duty scam: Gujarat collecting illegal charges on flats under 50–100 sq m

Thousands of homebuyers in Gujarat, who purchased small flats may have been illegally charged stamp duty and penalties, despite their properties being legally exempt under both past and current laws. 

Property lawyers and civic activists allege that the Revenue Department has been collecting stamp duty on flats under 50 square metres in major cities, and under 100 square metres in other areas—without any legal basis in the Gujarat Stamp Duty Act, after the 2025 amendment.

What’s happening?

The issue affects properties—particularly low-income flats sold between 1982 and 1999—that were officially exempt from stamp duty under a government resolution dated April 27, 1982. That resolution waived stamp duty on flats smaller than 50 sq m in cities like Ahmedabad, Vadodara, Surat, Rajkot, Jamnagar, and Bhavnagar, and under 100 sq m in other areas.

Yet, despite no legal change, revenue officials began charging stamp duty—and penalties up to 300%—when such properties were resold years later. The move stems from a July 2021 circular issued by the Deputy Collector (Stamp Duty) in Mehsana, which directed authorities to retroactively assess and collect duty on older sales.

What does the 2025 amendment say?

In 2025, the Gujarat government amended the Stamp Act, allowing collection of duty on certain cooperative housing transactions dating back to April 4, 1994, particularly under the Bombay Non-Trading Corporation Act. However, nowhere in the amended Act is there any provision to charge stamp duty on flats below 50 or 100 sq m. Legal experts say this means the exemption still stands.

How are buyers being affected?

Buyers—especially those who booked their homes decades ago—are being hit with unexpected demands when they try to sell or register their properties today. Properties that were never liable for stamp duty are now being evaluated at current market rates, and buyers are being forced to pay stamp duty as if the exemption never existed.

Worse, authorities are also levying penalties of up to three times the duty amount, something legal analysts argue is a clear violation of the Limitation Act, 1963, which caps legal claims on immovable property to 12 years. “If the state enforces limitation on citizens, it cannot ignore the same rule for itself,” a Vadodara-based civic activist said.

So was stamp duty ever allowed on these flats?

Before 1982: Yes — stamp duty was charged on all properties.

From 1982 to 1999: No — small flats were exempt under a specific resolution.

Post-1999: No formal withdrawal of the exemption was issued, and for decades no duty was collected.

2021 onwards: Revenue officials began retroactive collection without legislative backing.

2025 amendment: Still no clause authorising stamp duty on <50 sq m flats, but collection continues.