A week after the Maharashtra government decided to reduce stamp duty on housing units, the Madhya Pradesh government on September 7 also announced that it was reducing stamp duty cess by 2 percent in municipal areas to boost the stagnant real estate market hit by COVID-19.
The state government charges urban cess at the rate of 3 percent. That has now been reduced by 2 percent bringing it down to 1 percent, sources said.
The reduction is valid until December 31, sources said.
The government hopes the move will boost the real estate market.
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Real estate developers had been asking for a reduction in stamp duty following the lockdown to encourage homebuyers to purchase properties during the pandemic.
Madhya Pradesh stamp duty rate has been slashed by 2 percent. The prevailing stamp duty rate in urban areas has now been reduced to 10.5 percent. It was earlier 12.5 percent.
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Registration of properties includes two levies - stamp duty fees and registration fees. Currently, the stamp duty is 9.5 percent and the registration fee is 3 percent in the state that makes it 12.5 percent – the highest in the country.
After today’s temporary reduction, the stamp duty has been reduced by 2 percent, making it 7.5 percent and the registration fee continues to be 3 percent. The total is 10.5 percent.
This means that on a Rs 1 crore property, the stamp duty charged earlier was Rs 12.5 lakh. This would now get reduced to Rs 10.5 lakh resulting in a saving of Rs 2 lakh, said property experts.
“It is a welcome step for the real estate sector which has been impacted by the pandemic. It was our demand for a long time,” Wasik Hussain, president, CREDAI (MP) told Moneycontrol.
“We are pursuing with the government to reduce the registration fees by 2%. The total would then become 8.5%,” he told Moneycontrol.
There are a total of 5,000 under-construction projects in the state and approximately 7 lakh units.
The Maharashtra government on August 26 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, until March 31, 2021, will be 3 percent, they said. The decision was taken at the state cabinet meeting on August 26.
Stamp duty rates in other major states largely hover anywhere between 5-8 percent, but they are lower in some states if property registration is executed in the name of a woman. Delhi, Uttar Pradesh, Rajasthan, Punjab, and Haryana offer relaxation in stamp duty for women buyers. The exemption on stamp duty ranges from 1-2 percent in different states.