Maharashtra cuts renewable energy costs: stamp duty waived, transfer fee reduced

The Maharashtra Cabinet, chaired by Chief Minister Devendra Fadnavis, on Tuesday approved a set of measures to accelerate renewable energy projects in the state. The decisions include a 25% discount on land transfer fees and a full exemption from stamp duty on internal land transfers between group companies and special purpose vehicles (SPVs). The incentives are part of the State Renewable Energy and Energy Storage Policy 2025-2035.

Under existing provisions of the Maharashtra land revenue and agricultural land laws, a group company or a subsidiary transferring land internally was required to pay a transfer duty of 25% of the land's market value to the District Collector. This duty was a significant financial burden, particularly for large-scale renewable projects that involve multiple land parcels. The cabinet has now granted a 25% reduction in this duty, which will apply when land is moved between a parent company and its SPV or between group entities.

In addition, a full stamp duty exemption has been granted for these internal transfers. Stamp duty is a tax on property transactions. When a renewable energy company purchases land, it pays stamp duty on that purchase. The land is often then transferred to an SPV, a separate legal entity set up to execute the project. Without the exemption, this internal transfer would attract stamp duty again, effectively taxing the same land twice. The government's move is aimed at reducing the overall cost of developing renewable energy infrastructure.

The exemption is subject to a clear condition. The final use of the land must be for renewable energy development. If a company avails of the exemption under the name of an internal transfer but later uses or sells the land for any other purpose, the transfer fee amount will be recovered along with interest, according to a statement from the Chief Minister's Office.

The cabinet also took a decision regarding delayed land acquisition compensation. It has revised the interest rate to be paid to affected persons in cases where compensation payments are delayed. The new rate will be one percentage point higher than the interest rate at which the Reserve Bank of India lends to commercial banks. This is expected to align the compensation rate with current market rates. The decision involves an amendment to Section 72 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013.

The issue of delayed compensation has affected many projects. For instance, compensation under CIDCO's NAINA project is still pending, causing hardship for landowners and residents. The revision in interest rate is intended to provide some relief to those who have been waiting for payments.

Industry observers say the measures will make it easier and cheaper for developers to set up renewable energy projects in Maharashtra. By reducing the cost of land transfers and avoiding double taxation, the state government hopes to attract more investment and speed up the transition to clean energy.