MVA budget: Stamp duty slashed by 1% point in MMR, Pune, Nagpur for 2 yrsUpdated: Mar 07, 2020 01:20 IST
The state budget presented by deputy chief minister and finance minister Ajit Pawar on Friday gave some respite to the ailing real estate sector by reducing the stamp duty by one percentage point for two years.
Currently, for every real estate transaction, the stamp duty charged is 5% with 1% metro surcharge, bringing the total to 6%. It has now been reduced to 5% – 4% stamp duty plus 1 % surcharge – till 2022. Pawar also announced a dip in registration charges for transactions in the Mumbai Metropolitan Region (MMR), Pune, Pimpri-Chinchwad and Nagpur for two years. Builders have been demanding the stamp duty be reduced to 3% from 6%.
The stamp duty is the second highest revenue gainer for the state government, after goods and services tax (GST). The total loss estimated from this rebate is ₹1,800 crore.
Welcoming the announcement, Niranjan Hiranandani, president, National Real Estate Developers Council (NAREDCO), said it will spur the sales. “We are happy that the government has acknowledged the slowdown and reduced the rates. This will definitely spur the sales in Mumbai and suburbs,” said Hiranandani.
NAREDCO had petitioned the government to reduce the stamp duty by half.
Vikas Jain, managing committee member, Credai-MCHI (Raigad) and CEO, Labdhi Lifestyle, said, “It will drive the sales ahead of Gudi Padwa.”
Realty experts point the deficit will be easily covered. “For a homebuyer, any rebate is welcome as he puts in all his savings for the transaction. Such rebates translate into higher volume of sales, which will eventually mean no loss of revenue,” said Pankaj Kapoor, CEO, Liases Foras, a real estate research firm.
Anuj Puri, chairman, Anarock Property Consultants, said it would encourage a significant amount of fence-sitters, especially those looking for affordable houses to take the plunge.
According to Liases Foras, the average annual sale of homes in MMR is 70,000 units, of which Mumbai account for 20,000. Currently, builders are saddled with unsold apartments of 2.93 lakh in MMR, of which Mumbai accounts for 1.09 lakh houses.
The past few years have been miserable for the realty sector as builders priced their apartments at exorbitant rates, forcing buyers to postpone their purchase plans. In addition, banks also tightened their lending norms due to scam in the Non-Banking Financial Companies (NBFC).