The Maharashtra government’s decision to reduce stamp duty on registration of properties is a ‘good step’ and will have a ‘positive impact’ on price reduction, housing and urban affairs secretary Durga Shanker Mishra said on August 28.
He also asked other states to follow suit in order to boost demand and sales during the pandemic.
"We had given suggestions to all the states to reduce it. The Maharashtra government has done it. We will pursue with others (states). It's a good step by the Maharashtra government. It will have a positive impact on cost reduction," he said at a webinar organised by industry body PHDCCI.
To boost the stagnant real estate market hit by COVID-19, 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, sources said.
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.
Mishra also asked the industry to send suggestions relating to change in the income tax law to enable developers to reduce prices without incurring any tax liabilities.
Gaurs Group managing director Manoj Gaur said at the webinar that if builders reduce prices by more than 10 percent below ready-reckoner rates, there is an additional tax burden on developers and buyers.
As for the Affordable Rental Housing Complexes (ARHC) scheme for migrants and urban poor, he said this would be a game changer in creating a market for rental housing.
Mishra said the government has finalised model tenancy law and is likely to be approved in the next one month. It will then be sent to states/UTs for adoption.
The ministry had floated the draft model tenancy law in July 2019. It proposes to establish an independent authority in every state and Union Territory for registration of tenancy agreements and even a separate court to take up all tenancy-related disputes.
The draft model tenancy law has proposed limiting the advance security deposits to two months’ rent, and has also suggested heavy penalties for tenants who decide to overstay. Those who do may have to shell out double the rent for two months and even four times.
On the Affordable Rental Housing Complexes (ARHC) scheme, Mishra said the programme aims to convert lakhs of vacant flats owned by the Centre and states into rental housing for migrant workers at very cheap rent.
"We want to bring vacant homes owned by the central, state and urban local bodies into this scheme and provide affordable rental housing to migrants/urban poor," he said.
Last month, the housing ministry had issued guidelines to implement the ARHC scheme in the country.
The Union Cabinet on July 8 approved the ARHC scheme for urban migrants employed in the industries, service sector and manufacturing sector close to their workplace in industrial as well as in non-formal urban sectors.
The scheme was announced by Finance Minister Nirmala Sitharaman as part of the Rs 20 lakh crore economic package to deal with the COVID-19 pandemic.
PHDCCI president D K Aggarwal demanded a reduction in stamp duty and GST as well as infrastructure status for the entire real estate industry. He also suggested an increase in the size of stress fund to Rs 1 lakh crore from the current Rs 25,000 crore.