Planning to buy a new home in Mumbai in the next two years? There’s some good news.
The cost of buying that dream home just went down. At a time when the country’s costliest real estate market the Mumbai Metropolitan Region (MMR) is grappling with a surplus of unsold homes, the Maharashtra government on Friday announced a 1 per cent cut in stamp duty for property transactions in the region for the next two years. Besides Mumbai, the concession was also extended to documents registered in Pune, Pimpri Chinchwad, and Nagpur Metropolitan Areas.
But there’s some bad news for car owners across the state. Maharashtra, on Friday, also announced a Rs 1 per litre increase in Value Added Tax on the sale of petrol and diesel to shore up revenues.
Announcing the sop for the construction sector in his Budget speech, Finance Minister Ajit Pawar said, “It is necessary to promote the state’s real estate sector in the wake of a slowdown.”
The 1 per cent cut in stamp duty, which will be applicable for the next two years, will reduce the stamp duty payable for property transactions in the Mumbai region from six per cent of the property’s market value as determined by the government to five per cent. For the remaining three regions, the cut will bring down the stamp duty payable from seven per cent to six.
With the economic slowdown eroding wealth and impacting buying sentiment across classes, India’s real estate sector has been the worst hit. At last count, the unsold inventory in MMR region alone was 2.24 lakh units, with nearly 60 per cent of it being in the affordable and the middle segment of units prices less than Rs 80 lakh.
Pawar, meanwhile, announced that the additional income earned by the state by way of the increase on VAT on petrol and diesel will be ring-fenced as “Green Fund” which would be used by the state to fund projects for addressing issues arising out of climatic changes.
“The increase in tax will enrich the state coffers by Rs 1,800 crore,” he said.
Contending that it was essential to draft a policy to study climate change, Pawar, meanwhile, indicated that the government plans to use the “Green Fund” for afforestation, urban forestry, promotion of non-conventional energy, conservation, and maintenance of water resources, sewerage disposal, and solid waste management, and controlling of river pollution among others. Maharashtra was already levying the highest tax on petrol and diesel in Maharashtra. The additional levy on diesel, in particular, may also impact vegetable prices, and push even food inflation up, some officials admitted. At retail pumps in Mumbai, petrol and diesel were being sold at Rs 76.80 and Rs 66.80 per litre, respectively, on Friday.
As a stimulus to boost industrial investment in the state, Pawar also announced reductions in electricity duty on industrial use in the state from 9.3 per cent of the consumption charges to 7.5 per cent. Industry captains had been demanding the concession for a while now. According to Pawar, the concessions in stamp duty and electricity duty will collectively cost the state exchequer Rs 2,500 crore in all.
Builders, meanwhile, welcomed the stamp duty concession. Nayan Shah, president, Maharashtra Chamber of Housing Industry (MCHI-CREDAI), when contacted, said, “Our representation to the government on issues that ail the sector is beginning to bear fruit. The 1 per cent reduction in stamp duty will benefit the middle income segment of buyers the most, and encourage home sales.”
Shah claimed that the sop was one of the demands raised by the industry outfit during its meeting with the chief minister last month. Niranjan Hiranandani, president (national) of the National Real Estate Development Council, said, “The move will reduce the cost of home buying, and will definitely boost the sector.” Hiranandani further claimed that the industry bodies had put forth a demand for a 50 per cent reduction in stamp duty. “But we view the concession offered as a beginning. It should result in a push in sales,” he claimed.
Anuj Puri, chairman, ANAROCK Property Consultants, a leading real estate services company, said, “A 1 per cent reduction of stamp duty in key cities of Maharashtra will definitely give some monetary relief to homebuyers, particularly those seeking affordable properties.”