Section 57 read with Third Schedule of the SEZ Act, 2005, has amended the provisions of Indian Stamp Act, 1899 so that no duty shall be chargeable in respect of any instrument executed by or on behalf of or in favour of the Developer or Unit or in connection with the carrying out of purposes of the Special Economic Zone. 

Now, the Department of Commerce has issuing the guidelines as follows:

(Extracts)

1.       Regarding Stamp Duty on purchase of land:

-          State Governments are expected to give full exemption of stamp duty as provided for in the SEZ Act

-          For the purpose of land before the formal approval, but after the in-principle approval, the State Government may either give the exemption of stamp duty up front (subject to final setting up of the SEZ) or insist that the developer pay the stamp duty but refund the same after the formal SEZ notification is issued.

-          If the SEZ notification is cancelled, the State Governments will be entitled to withdraw the concession of stamp duty and recover the same from the developer.

2.       Regarding stamp duty on purchase of land for activities ancillary to the SEZ, e.g. housing, hotel, recreation, entertainment, golf, etc.?

-          The facility of exemption from stamp duty on purchase of land by the SEZ developer for activities like housing, hostel, recreation, entertainment, golf etc. would be available only with respect to the land which falls within the SEZ area.

-          Any facility falling outside the SEZ area will not be eligible for exemption from stamp duty

3.       Regarding stamp duty in respect of sale or conveyance of the land developed by the Developer only to the units in the SEZ or to any other person or entity

-          Land, buildings, etc. falling outside the notified SEZ will not be eligible for exemption from stamp duty.

-          Sale of SEZ land to units or other persons or entities is not allowed.

-          Conveyance of land, buildings, premises, etc. by lease or otherwise (but not by sale) in an SEZ canbe made only to the units in the SEZ or entities permitted to carry out operations within the SEZ areas as per SEZ Rules. In such cases above, the concession of stamp duty exemption will be allowed.

-          Other persons or entities will not be eligible for concession.

4.       Regarding stamp duty in respect of purchase or sale of land, buildings, etc. by the Developer at a place outside the SEZ

-          The facility of exemption of stamp duty to a Developer will not be available for purchase or sale of any land or building at a place outside the notified SEZ.

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Stamp duty exemption for SEZ land: states to grant or refund pending formal notification, limited to within SEZ. Section 57 with the Third Schedule exempts stamp duty on instruments connected to SEZ purposes; State Governments must grant full stamp duty exemption for SEZ land purchases or permit conditional payment with refund upon formal notification, with recovery if notification is cancelled. The exemption applies only to land within the notified SEZ, including ancillary uses inside the zone. Sale of SEZ land to third parties is disallowed; conveyance by lease or other permitted transfers to SEZ units or authorised entities may receive the exemption. Transactions outside the notified SEZ are not eligible.