HomeDaily NewsDNA: Mumbai: Get ready to pay 1% extra on stamp duty surcharge.

DNA: Mumbai: Get ready to pay 1% extra on stamp duty surcharge.

Soon, transactions on properties in Mumbai will become costlier. The state has decided to charge an additional 1 per cent stamp duty surcharge on value of a property. This additional levy on sale, gift and usufructuary mortgage of property in the jurisdiction of Brihanmumbai Municipal Corporation (BMC) will help raise additional funds for vital urban infrastructure projects like the Metro railway and sea links. On Tuesday, the State Legislative Assembly approved an amendment to the Mumbai Municipal Corporation Act, 1888. This means that the stamp duty levied on the sale, gift and usufructuary mortgage of immovable property in Mumbai, shall be “increased by a surcharge at the rate of 1 per cent.” At present, stamp duty is collected at the rate of 5 per cent of the ready reckoner (RR) rate on sale transactions and also on gift deeds made to a third person. The amendment will increase it to 6 per cent. In addition, registration charges are to be paid at the rate of 1 per cent of the value or Rs 30,000 whichever is more. The RR rates are used to calculate the value of immovable property like commercial or residential buildings or land and charge stamp duty on their transactions.   The state government shall, every year, pay the BMC or the agency which has undertaken notified important urban transport projects, like metro and monorail, bus rapid transit system, freeways and sea links, a grant-in-aid approximately equal to the amount of additional duty realised on account of the surcharge.

Every year, nearly 2.50 lakh property transactions are registered in Mumbai. Around 54 per cent of these are conveyance and sale deeds, while gift deeds and all classes of mortgages make up 2-3 per cent and 2.5 per cent respectively, said a senior officer from the state department of registration and stamps.

“Across Maharashtra, except Mumbai, the stamp duty is already levied at 6 per cent, including the additional 1 per cent surcharge. This surcharge was imposed when the state government decided to scrap the local body tax (LBT) in 2015. This did not apply to Mumbai, where octroi (scrapped after introduction of Goods and Services Tax- GST in 2017) was being collected and stamp duty was collected at 5%. The new provisions will do away with this incongruence and bring Mumbai at par with municipal areas in the rest of the state,” the official explained.

A builder said the additional surcharge would affect the market sentiment and sales, which had already dipped due to broader economic factors and the GST, which is collected at the rate of 12% on construction cost, up from the 6% service tax and value added tax levied in the pre-GST era.

This year, the Department of Registration and Stamps has a target of Rs 24,000 crore. Last year, its collections were Rs 26,500 crore, higher than the Rs 21,000 target. The revised estimate was Rs 23,000 crore. The collections for 2016-17 were Rs 21,026 crore which was marginally lower than Rs 21,657 crore in 2015-16.

The Mumbai circle, which comprises of Mumbai city and the suburbs, is expected to garner revenue of over Rs 10,000 crore. In 2017-18, the figure was Rs 10,500 crore.

In 2017-18, the total number of documents registered with the department stood at 21.49 lakh, higher than the previous financial year’s 20.46 lakh. Around 23 lakh transactions were registered in 2015-16.