A real estate developers’ body has urged the Maharashtra state government to reduce the stamp duty charges back to 2 percent in Mumbai until March 31, 2022 following a slowdown in housing sales and reduction in revenue collections for the government.
CREDAI-MCHI believes that the downward trend is set to continue with numerous genuine buyers sitting on the fence due to high transaction costs, adversely affecting not just the real estate sector and its over 250 ancillary industries but also slowing down the momentum of the state’s economic revival in the post COVID-19 era, it said in separate letters to Udhav Thackeray, chief minister of Maharashtra, Ajit Pawar, finance minister and deputy chief minister of Maharashtra and Balasaheb Thorat, revenue minister of Maharashtra.
Property registrations and stamp duty revenue collections were down by 70 percent in May as compared to March, signifying the importance and need to cut stamp duty charges to re-galvanise the economy, it said.
“The real estate sector in Maharashtra and more specifically in Mumbai, was thriving on the back of the stamp duty rebate announced by the state government in August. CREDAI-MCHI had requested for an extension of the reduction beyond March to ensure that the momentum of this industrial and economic revival stays on its tracks,” said Deepak Goradia, president, CREDAI-MCHI.
“In the last couple of months, we’ve seen a steep downward trend in enquiries and sales, hampering not just the steady progress made by real estate but also the 250+ ancillary industries which come into play due to industry’s strong multiplier effect. It is now imperative that the state government realises the need for a stamp duty rebate to enhance homebuyer sentiments and also increase its own revenue collections which have taken a massive hit in May,” the letter said.
It also recommended that stamp duty rate be brought down from 6 percent to 3 percent in other regions of Maharashtra.
On August 26, the Maharashtra government had decided to temporarily reduce stamp duty on housing units from 5 percent to 2 percent until December 31, 2020. Stamp duty from January 1, 2021 to March 31, 2021, was at 3 percent.
Inspite of the second wave of COVID-19 pandemic, property registrations in Mumbai swelled in March 2021 as the unprecedented rush among the homebuyers continued in the backdrop of all-time low home loan rates, attractive price discounts and reduction in stamp duty charges.
According to a report by Knight Frank India, the state government’s collections from stamp duty witnessed a 50 percent decline in May 2021 compared to May 2019 despite overall registrations dropping only by 15 percent. This was because 70 percent of registrations in May 2021 were for apartments that were transacted in the four months of December 2020 to March 2021 paying stamp duty rates of 2 percent and 3 percent only but registered now.
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