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Will Maharashtra's 50% cut in stamp duty boost housing demand?

Experts say that while this temporary but strong inoculation into the dampened market sentiment will help revive sales, it may not be enough. Tax sops by the government and discounts by developers may do the trick

The Maharashtra government has reduced by 3 percent the stamp duty on housing units till December 31, 2020, a move aimed at helping an ailing real estate market that has been hit hard by the coronavirus outbreak.

From January 1, 2021, to March 31, 2021, the reduction in duty will be 2 percent, the state cabinet that met on August 26 decided, staggering the cut in one of the busiest realty markets in the country that includes Mumbai, where space is at a premium. 

“The phased reduction in the stamp duty rates from the present 5 percent in Mumbai and Pune to 2 percent (until December 2020) and 3 percent (January - March 2021) is a much-awaited measure from the government of Maharashtra as the residential real estate markets in these top two cities are reeling under pressure,” JLL CEO & Country Head (India) Ramesh Nair said.

In Maharashtra, stamp duty charges are 5 percent for cities like Mumbai, Pune, Nagpur and Nashik and 6 percent for others. The rates in other major states are between 5 and 8 percent but in some places, lower stamp duty is charged if the property is bought in the name of a woman.