As the saying goes, the devil is in the details. The Maharashtra Government on late Friday evening issued a gazette notification saying that there will be a flat 2% reduction in stamp duty from September 1 to December 31, 2020, so that the effective stamp duty will be 3% in Mumbai. For January 1 to March 31, 2021, it will be a 1.5% reduction, making it an effective stamp duty of 3.5% in Mumbai and other cities.
There is no local body tax (LBT) in Mumbai. However, as regards the LBT, which is applicable in other towns, including Thane, Navi Mumbai, Pune, Nashik and Nagpur, from September 1 to December 31, 2020, the government has waived 1% tax, while it has been reduced to .5% from 1% for January 1 to March 31, 2021, in these areas.
In rural areas, the stamp duty will be reduced to 2% from 5% comprising 4% stamp duty and 1% LBT/Zilla Parishad tax, whichever was applicable there. So, clearly the realty sector and property buyers are expected to benefit in Tier II and III cities and not much in metros, including Mumbai.
The government has further clarified that the stamp duty cut will be applicable only for conveyance and agreement for sale and not for any other documents.
However, the state cabinet on August 26 had approved reduction in 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. It clearly shows there is a mismatch between what the state cabinet had approved and the gazette notification published today.
For a Rs 1 crore flat, at present, the stamp duty is charged at 5% which comes to Rs 5 lakh. With Friday's notification, the flat buyer will have to pay Rs 3 lakh, instead of Rs 2 lakh, as per the 2% stamp duty proposed by the cabinet for the period September 1 to December 31, 2020.
For a Rs 1 crore flat, the flat buyer will have to pay stamp duty worth Rs 3.5 lakh for the period January 1 to March 31, which would have been Rs 3 lakh as per the cabinet decision.
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