The Maharashtra Cabinet approved a proposal on Wednesday to reduce stamp duty by 3 per cent on all land or home sale transactions executed and registered between September 1 and December 31, this year. There will be a 2 per cent reduction on stamp duty from January 1 to March 31, 2021.
Batting for an early resumption of real estate works, a government-appointed committee for economic revival had earlier recommended concession in stamp duty for first sale transactions.
Another committee headed by HDFC Chairman Deepak Parekh, which studied the impact of the lockdown on the sector, too, had batted for the cut, while also pushing for reduction in construction premiums. A plan to lower construction premiums is also in the works, said officials.
The government is hoping that the concession will kickstart home buying in Maharashtra. Tax income from property transactions is the second highest revenue grosser in the state after Goods and Service Tax.
In Mumbai, the stamp duty rate is 6 per cent of the agreement value or the ready reckoner value, whichever is more. The concession will mean that this will drop to 3 per cent of these values from September 1.
“This will certainly stimulate the housing demand and help in converting inquiries into sales closures. The fiscal advantage should nudge fence sitters to convert into actual home buyers with rippling effect on economic growth. With many other favorable market conditions, this announcement shall rekindle the ailing real estate sector and see volume in transactions,” said National Real Estate Development Council (NAREDCO) national president Niranjan Hiranandani.
He further emphasised that if the central government can slash GST rates, it would act as a shot in the arm to the real estate sector.
In another move to push construction and redevelopment activity in the Mumbai Metropolitan Region, the state Cabinet on Wednesday approved a proposal to extend Mumbai’s Slum Redevelopment Authority (SRA) model to all urban local body limits in the region. Ironically, the Mumbai model, which promised heightened area incentives and perks to slum redevelopers, has fared miserably with just 20 per cent projects completed in over two decades.
The SRA will have a separate set up for clearance of projects in the rest of MMR. The Cabinet also appointed a study group to check if more than one authority would be needed for these areas and the feasibility of extending the same slum redevelopment model to urban agglomerates outside MMR.
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