In a move that is likely dampen the mood in the real estate market that is already in slowdown mode, the state government has proposed to levy a surcharge on stamp duty of 1% on property transactions, thus making houses even more costlier.
The state government has proposed to levy a surcharge of 1% on stamp duty, increasing it to 6% from the existing 5%. On July 19, the state government published draft of the Mumbai Municipal Corporation (Second Amendment) Act, 2018 by insertion of Section 144 F where it plans to levy additional stamp duty on transfers of certain immovable properties. They would be levied on sale, lease, gift and mortgage. The state government in its bill said the money would be used to implement important urban transport projects related to mass rapid transport systems.
Builders condemned the hike. “This will increase the cost of the transactions of realty deals and is expected to further have an effect on the already difficult market in the short-term,” said Rajeev Jain, director, Nirmal Lifestyle.
Dhaval Ajmera, director, Ajmera Group, lamented that despite the implementation of the Goods and Services Tax (GST), which was touted as the only tax, real estate continued to have both stamp duty and registration charges apart from GST. “This additional surcharge is likely to disappoint overall sentiment and will impact micro-markets across and Mumbai Metropolitan Region. We might see delayed decisions from potential buyers, especially for those seeking property in the affordable market, as their budgets are likely to suffer a blow due to this hike,” said Ajmera.
“On one hand, the government talks of rationalising taxes and on the other, increases taxes,” said Pankaj Kapoor, CEO, Liases Foras, a real estate research firm. “This will especially hurt when the sector is in recovery mode.”
The real estate sector in the past few years continues to be plagued by slowdown due to decrease in sales and new launches. In addition, banks and financial institutions also made home loans stringent and hiked interest rates. However, things are gradually improving this year as builders are now decreasing rates as well as giving sops to woo homebuyers. Banks have also eased norms and brought down interest rates on home loans.