Punjab reduces stamp duty to 0.25% and registration fee to Rs 1,000 on equitable mortgages and hypothecation, easing MSME loans and boosting business growth.

Cabinet Minister Sh. Sanjeev Arora announced that the Government of Punjab has imposed a stamp duty of 0.25% of the loan amount on all equitable mortgages (where land is given as collateral) and hypothecation of immovable property, i.e. stocks given as collateral against bank loans in January 2025, with an additional 0.25%, subject to a ceiling of 1 lakh, on registration of equitable mortgages imposed.

Speaking to the media, Cabinet Minister Sh. Sanjeev Arora said that the Punjab government was generating a lot of revenue. However, several industry associations such as CII, PHDCCI, APEX CHAMBER, CICU, FICO, and SLBC have noted several difficulties, including double taxation, because most industrial loans contained both equitable mortgages and some hypothecation of immovable property. A loanee is currently paying 0.25% duty on equitable mortgage, 0.25% duty on hypothecation, and 0.25% on registration (capped). This is around 0.65% effective incidence.

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It was particularly burdensome for the state’s over 14 lakh registered MSMEs. They create the most jobs, but these fees stifle their expansion and viability.

Sanjeev Arora stated that the Punjab government has decided to revise the published prices in light of this issue. In this connection, Stamp Duty on the whole loan amount, including all related instruments such as Equitable Mortgage and Hypothecation, will be imposed at 0.25% of the loan amount, up to a maximum of Rs. 5,00,000 (Rs Five lakhs only). The registration fee for an equitable mortgage will be decreased from Rs. 100000/- to Rs. 1000.

Following the Cabinet decision, he stated that a bill will be introduced to the Vidhan Sabha to alter the Indian Stamp Act accordingly. This rationalisation connects Punjab with leading industrial states, indicating a pro-business position and enabling the state to compete more successfully for productive investments. It will result in a significant rise in the ease of doing business, credit availability, and credit uptake in the state. It will also improve, potentially leading to additional investments and job opportunities.

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With this step, Punjab has surpassed other states in terms of these charges, including Haryana, Kerala, Maharashtra, Madhya Pradesh, and Gujarat.