Maharashtra Waives Stamp Duty on Enemy Properties to Boost Auction Participation

The Maharashtra government has announced a major policy move to improve the sale of long-idle assets by waiving stamp duty on enemy properties sold through auctions. The decision, approved at a recent state cabinet meeting, is aimed at increasing bidder participation and improving price discovery for these properties, which have historically attracted limited interest due to legal complexities and high transaction costs.

Officials believe the waiver of stamp duty on enemy properties will significantly lower acquisition costs and make auctions more attractive to buyers, particularly in high-value markets like Mumbai, where such assets are concentrated.

What Are ‘Enemy Properties’?

Enemy properties are assets that once belonged to individuals who migrated to countries considered hostile to India, primarily Pakistan and China, following wars and geopolitical conflicts.

These properties are governed by the Enemy Property Act, 1968, enacted after the 1965 India–Pakistan war. Under the Act:

• Properties were vested with the Custodian of Enemy Property for India (CEPI)
• Original owners and their heirs were barred from selling, transferring, or inheriting them
• Assets remained under government control for decades

The objective was to prevent strategic or economic misuse of these properties while ensuring legal clarity.

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Why Maharashtra Waived Stamp Duty on Enemy Properties

Despite being located in prime urban areas, auctions of enemy properties have historically seen limited bidder participation. State revenue officials point to transaction costs—especially stamp duty as a major deterrent.

A senior official from the Maharashtra revenue department said the waiver of stamp duty on enemy properties would reduce the effective purchase price and encourage greater interest in auctions. The decision was taken after a formal request from CEPI, which conducts these auctions with central government approval.

How the Stamp Duty Waiver Will Work

Under the new policy:

• Buyers will not be required to pay stamp duty or registration charges
• The waiver applies to both sale and purchase transactions
• Auctions conducted by CEPI will directly benefit from reduced acquisition costs

By removing stamp duty on enemy properties, Maharashtra has effectively lowered the entry barrier for bidders, particularly institutional buyers and developers who factor transaction costs heavily into feasibility assessments.

Enemy Properties in Maharashtra: City-Wise Distribution

Maharashtra has 428 enemy properties, with a significant concentration in Mumbai:

Mumbai’s dominance makes the stamp duty on enemy properties waiver particularly impactful, given the city’s high land values and investor interest.

How the Waiver Could Revive Auction Participation

The waiver of stamp duty on enemy properties is expected to deliver multiple benefits:

• Lower upfront costs, improving return calculations
• Higher bidder participation, especially in Mumbai auctions
• Better price discovery, reducing distressed sale risks
• Faster monetisation of dormant government-held assets

Experts say transaction costs in Mumbai can account for 6–8% of property value, making the stamp duty waiver a meaningful incentive.

Legal Background: How Enemy Properties Are Sold

In 2017, the Enemy Property Act was amended to allow:

• Sale or disposal of enemy properties
• Prior approval from the central government
• E-auctions via tenders or quotations

Since then, CEPI has conducted multiple auctions across India. However, the absence of state-level concessions like stamp duty relief had limited their success—an issue Maharashtra is now addressing directly.

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Impact on Real Estate Market and State Revenue

While Maharashtra may forgo immediate stamp duty revenue, officials believe the trade-off is justified.

Potential long-term gains include:

• Monetisation of non-performing public assets
• Increased transparency in land ownership
• Productive reuse of urban land parcels
• Reduced administrative burden of maintaining idle properties

By waiving stamp duty on enemy properties, the state signals a shift from asset preservation to asset productivity.

Conclusion

Maharashtra’s decision to waive stamp duty on enemy properties marks a pragmatic policy intervention aimed at unlocking value from long-frozen assets. With hundreds of such properties many in prime locations the move could significantly improve auction outcomes, attract serious bidders, and accelerate asset monetisation.

As auctions resume under the new framework, participation levels and realised prices will indicate whether this cost-reduction strategy delivers the intended results.