In a bid to boost the ailing realty sector and improve buyer sentiment which has turned taken a beating because of the coronavirus-induced lockdown, the Maharashtra government on Wednesday reduced stamp duty in urban areas from 5 per cent to 2 per cent, effective September 1 to December 31, 2020, and from 5 per cent to 3 per cent, effective January 1 to March 31, 2021. This two-three per cent reduction in rates will result in significant savings for homebuyers. However, the urban local body tax has been retained at one per cent.
The current rate of 5 per cent means that a flat buyer in Mumbai pays Rs 5 lakh in stamp duty for a Rs 1 crore flat. But now, if the deal takes place between September 1 and December 31, 2020, the stamp duty will be Rs 2 lakh. If this same deal takes place between January 1 and March 31, 2021, the buyer will have to shell out Rs one lakh more in stamp duty. Already, the state government had reduced the 1 per cent metro cess in April, whereby the prevailing stamp duty rate was 5 per cent.
In rural areas, stamp duty rates have been cut from 4 per cent to 1 per cent in rural areas till December 31, 2020 and will be 2 per cent till March 31, 2021.
The stamp duty cut will be restricted only to the agreement for sale and conveyance and not for lease or development agreements. The state cabinet gave its nod at the meeting held on Wednesday. The Free Press Journal broke this story on August 19. The announcement was made by Revenue Minister Balasaheb Thorat after the cabinet meeting.
Real estate developers had made a series of representations to the state government, seeking reduction in stamp duty following the lockdown, to encourage homebuyers to purchase property during the pandemic.
National Real Estate Development Council President Niranjan Hirandanani said the government decision would certainly stimulate the housing demand and help in converting inquiries into sales closures. "The fiscal advantage should nudge fence-sitters to turn into actual homebuyers and will have a ripple effect on 269 allied industries and employment generation, leading to economic growth. This announcement will rekindle the ailing real estate sector and increase the volume of transactions,’’ he told The Free Press Journal.
On the other hand, Knight Frank India CMD Shishir Baijal hoped the government decision would provide temporary relief to end-users looking for relaxation in rates, to complete their pending purchases. ‘’We hope this move will help the residential real estate segment to gain the ground lost during the pandemic and stimulate demand,’’ he noted.
S Raheja Realty Director Ram Raheja said the government move would boost sales and those sitting on the fence would take the plunge. ‘’What's commendable is that they also put a timeline to it, which encourages buyers to buy sooner, rather than later,’’ he opined.
Poddar Housing and Development Ltd MD Rohit Poddar hoped that homebuyers would be able to get more benefits and more registrations would take place.