Govt clears 1% stamp duty surcharge on properties to pay for premium urban transport projects in Mumbai.
Buying new properties in Mumbai is likely to become more expensive as the state government has decided to levy a 1per cent additional stamp duty on property sales to generate additional funds for the city’s bigticket infrastructure projects.
This is besides the 5 per cent stamp duty in place currently.
A new bill seeking an amendment to the Mumbai Municipal Corporation (MMC) Act was tabled in the assembly on July 19, seeking to levy a 1 per cent surcharge on transfer of immovable property, and after due appropriation every year pay the BMC a grant-in-aid approximately equal to the surcharge levied.
The bill seeks to add Section 144F after Section 144E in the MMC Act. Section 144E of MMC Act relates to levy of property tax at reduced rates for buildings and lands of special development projects approved by the government. Section 144F seeks to levy the stamp duty surcharge where one or more urban transport projects related to mass rapid transport system such as Metro, monorail and buses are being executed. Urban transport projects include freeways and sea links.
“The MMRDA has no revenue source apart from its land bank. Therefore, this proposal to levy a 1 per cent additional stamp duty was proposed. The cabinet had cleared it long ago,” said RA Rajeev, metropolitan commissioner, MMRDA.
A senior official from the department of registration and stamps said, “Barring Mumbai, the 5 per cent stamp duty and 1 per cent surcharge has already been implemented elsewhere in the state as per Section 149B of Maharashtra Municipal Corporations Act. An amendment was needed to implement this in Mumbai, and the bill seeks to amend the MMC Act.”
The real estate sector expressed its dissatisfaction with the government’s decision. Mayur Shah of Marathon Group and president of Maharashtra Chamber of Housing Industry — the apex body of real estate developments in Mumbai metropolitan region (MMR) — said, “The levy of 5 per cent stamp duty and 1 per cent surcharge was implemented in MMR regions like Thane, Panvel and Navi Mumbai last year. But, 1 per cent becomes a substantial amount in Mumbai and will take the total taxes to 19 per cent, including 12 per cent GST, 5 per cent stamp duty and 1per cent registration charge. This is too much taxation.”
Rajan Bandelkar, president elect of National Real Estate Development Council, Maharashtra, called it a “wrong” move on the part of the government. “The real estate industry is going through a lot of pain. The government did not increase ready reckoner rates in view of that. But, the 1per cent stamp duty hike amounts to hiking the ready reckoner rates through backdoor tactics.”
Dhaval Ajmera, director of Ajmera Group, said although all taxes were to be subsumed under GST, in real estate, stamp duty and other local body taxes continue. “Mumbai is one of the progressive real estate markets in the country, and taxation has a major impact as it affects pricing. The additional 1per cent duty is likely to disappoint the overall sentiment and will impact micro-markets across Mumbai. We might see delayed decisions from potential buyers, especially from those seeking property in the affordable market, as their budgets are likely to suffer a blow,” he said.
“The MMRDA has no revenue source apart from its land bank. Therefore, this proposal to levy a 1per cent additional stamp duty was proposed” —RA Rajeev, MMRDA
“The real estate industry is going through a lot of pain. The 1per cent stamp duty hike amounts to hiking ready reckoner rates through backdoor tactics”
—Rajan Bandelkar, NAREDCO