The Maharashtra Government has reportedly proposed a hike in stamp duty by 1% over and above the current 5% through a surcharge/cess on all immovable property transactions in the state. The Government is aiming at collecting an added Rs.500 crore in the present fiscal through this move and the bill is expected to be introduced in the current monsoon session of the state legislature that starts from the 24th of July, 2017.
According to senior officials, the Government is considering this option through amendments for the Maharashtra Stamps Act of 1958. This is one of the options being looked at for mobilization of added resources, particularly after the Government declared its Rs.40,000 crore waiver scheme for crop loans and the 30% cut in budgetary spending which followed. Officials have also informed that the Government has mopped up around Rs.28,000 crore via registration fee and stamp duty in 2016-17.
According to the executive director at Knight Frank, Gulam Zia, any added transactional cost through an increase in stamp duties may only deter potential buyers in a scenario where real estate deals are anyway going down. With the focus on the Housing for All by 2022 mission of the Prime Minister Narendra Modi, affordable housing has to be totally insulated from any such impact of higher stamp duties. According to the Founder President of NAREDCO (National Real Estate Development Council)- Maharashtra, the move by the Government will lead to poor sentiments in the micro markets across the MMR (Mumbai Metropolitan Region) and Mumbai. The cost of purchasing land may also increase after this hike which will also affect real estate price points in the city.
The Vice Chairperson of the Nahar Group, Manju Yagnik, buyers will be affected hugely since taxation has been scaled up between 3-5%. The real estate industry will be impacted on account of the increase in stamp duty. The CEO & Country Head at JLL India, Ramesh Nair, the increase in stamp duty will negatively impact sentiments of middle class buyers. The Government may consider a waiver or rationalization of the stamp duty for affordable housing as long as there is clear adherence to the parameters under which home loans are disbursed for the purchase of these homes.