Karnataka state assembly has passed the bill slashing stamp duty by 2% on flats priced below Rs 45 lakh but real estate experts say that it will make marginal difference to sales as it is restricted to properties priced under the said amount.
The assembly passed an amendment to the Stamp Act, 1957, slashing the stamp duty payable on housing units priced between Rs 35 lakh and Rs 45 lakh to 3% on September 20. The 2% reduction is only applicable on first-time registration.
In March, former Karnataka chief minister BS Yediyurappa had proposed a 2 percent cut in stamp duty for apartments valued between Rs 35-45 lakh in the state Budget for 2021-22.
"To promote affordable housing, the stamp duty for the first registration of apartments valued between Rs 35 and Rs 45 lakh is proposed to be reduced to 3 percent from 5 percent," Yediyurappa had said on March 8.
Experts say that the move is ‘restrictive’ and should have been for properties across categories.
“Karnataka Government’s decision to slash stamp duty by 2% will provide marginal boost to the real estate sector. Although the move is definitely progressive, it will only make marginal difference to the volume of sales because 2% is capped for properties worth 45L only. While it will save cost to homebuyers, the volume of sales below 45L is restricted. Had the stamp duty cut been across the price categories as was done by the Maharashtra government, the impact would have been desirable. Limiting it to properties worth up to ₹45 lakh may not lead to volumes,” Shantanu Mazumder, Executive Director – Karnataka, Knight Frank India.
It is restricted to apartments in the price band of 35 to 45 lakh and very few buyers will benefit from this. The reduction should be for properties across segments and prices. The relaxation should be spread across registration of plots, houses, apartments up to 1 crore, said M S Shankar, general secretary, Forum for People's Collective Efforts (FPCE).
In July this year, the Karnataka government had decided to slash stamp duty on registration of apartments that cost Rs 35-45 lakh from 5 percent to 3 percent.
On August 26, 2020, the Maharashtra government decided to temporarily reduce stamp duty on housing units from 5 percent to 2 percent until December 31, 2020 to boost the stagnant real estate market, which had been hit hard by COVID-19. Stamp duty from January 1 until March 31 will be 3 percent.