Two state governments, Maharashtra and Karnataka, announced stamp duty sops for homebuyers in their respective state budgets on March 8.
While Maharashtra chose the occasion of Women’s Day to announce a 1 percent cut on stamp duty charges if the transfer of house property or registration of sale deed is in the name of a woman, the Karnataka government proposed reduction of stamp duty charges to 3 percent for homes valued between Rs 35 lakh to Rs 45 lakh.
"This decision will boost the demand for affordable houses in the state and encourage newer projects in this category thereby further motivating the buyer with more options to choose from. While this is something we are happy about, it would have been a delight if the same reduction was applicable across all the segments and not restricted to only houses ranging between Rs. 35-45 lakhs,” said Ashish R. Puravankara, managing director, Puravankara Limited.
The decision of the Karnataka government to reduce stamp duty to 3 percent for homes in the Rs 35 lakh to Rs 45 lakh category, comes as a welcome move. However, unlike Maharashtra, Karnataka has chosen only the affordable housing segment for the stamp duty reduction, which will give a boost specific to this particular category alone, said Dhruv Agarwala, Group CEO, Housing.com, Makaan.com and Proptiger.com
As per the Proptiger Q4 report, the affordable segment contributes the highest share to the national stock of unsold inventory at 48 percent, with Bengaluru having 71,198 unsold units as of the end of last calendar year. Out of this, around 9,185 units are in the price bracket of Rs 35 - Rs 45 lakh, which is only 13 percent of the total unsold inventory in Bengaluru.
Karnataka had previously also reduced stamp duty last year to provide a boost to the real estate sector. Last year, it had slashed the stamp duty on houses costing less than Rs 20 lakh to 3 per cent from 5 per cent.
“This will prove encouraging for the first-time home buyers and help strengthen the ecosystem of investment in real estate and accelerate purchase decisions. However, it would have been a big push if the state government would have allowed this reduction of the stamp duty across all budget segments of the property buyers,” said an official spokesperson of SOBHA Limited.
“This reduction will help propel demand for the sub-50 lakh residential market. This is a great first step and we hope that the sops are extended to homes in upper price bracket as well. In doing that will the true potential of the market will be realised. Further, if the real estate developers are able to absorb the remaining stamp duty value, it will make the residential sector in Karnataka extremely attractive and viable for end users,” said Shishir Baijal, Chairman & Managing Director, Knight Frank India.
On the occasion of Women’s Day, the Maharashtra government announced a 1 percent cut on stamp duty charges if the transfer of house property or registration of sale deed is in the name of a woman, the state government said.
"On International Women's Day, I propose concession in stamp duty of 1 percent over the prevailing rate exclusively to women, provided the transfer of house property or registration of sale deed is in the name of woman or women only," Maharashtra finance minister Ajit Pawar said while presenting the state Budget on March 8.
"Due to this concession, there will be revenue shortfall of around Rs 1,000 crore," he said.
On August 26, the Maharashtra government had announced to cut stamp duty on housing units from 5 percent to 2 percent until 31 December, 2020. From January 1 to 31 March, 2021, the stamp duty charges were reduced to 3 percent.
“Majority of women are buying homes now not only as an investment but also for financial security. This step by the government ratifies their support towards female homebuyers. It will also help provide security to dependent women as more men will buy houses in the name of the women in their family,” said Ram Raheja, director at S Raheja Realty.
Mumbai, the financial capital of India, witnessed a rise in property registration numbers in February, thanks to stamp duty cut by the Maharashtra government.
In February 2021, properties worth Rs 11,745 crore were sold in Mumbai, up by 34 percent year-on-year, according to data shared by Propstack. The total value of properties in September stood at Rs 9,025 crore; Rs 11,640 crore in October; Rs 14,395 crore in November; Rs 34,025 crore in December 2020; Rs 10,170 crore in January, Propstack mentioned.
In January this year, ministry of housing and urban affairs secretary Durga Shanker Mishra had also hinted that more states are considering reducing stamp duty to boost real estate sales. “Besides Maharashtra and Karnataka that have reduced stamp duties, some more states are seriously considering doing the same,” he had told reporters.
To boost sluggish sales during the COVID-19 pandemic, the Centre has time and again suggested states to reduce stamp duty.
In February, the Delhi government had decided to slash circle rates for residential, commercial and industrial properties in Delhi by 20 percent flat until September 30, 2021.