The Maharashtra government has decided to allow a 1 per cent increase in stamp duty on property transactions, which will increase overall costs for home buyers in Mumbai, the country’s most expensive real estate market.
The Cabinet had on Tuesday approved a proposal for the increase in stamp duty on property transactions to fund major transportation projects such as the Metro and Monorail corridors. With this, the stamp duty in Mumbai will go up to 6 per cent although senior officials in the revenue department admitted that the Centre had issued guidelines urging states to cap stamp duty on property transactions at 5 per cent. The new rate will come into effect once the government issues a notification.
Senior officials also confirmed that the state government was actively considering a move to levy cess on Transferrable Development Rights (TDR) certificates as means to raise additional revenue. With increased revenue expenditure and revenue collection below par worsening the state’s overall financial position, the finance department is pushing for the move, sources confirmed.
In fact, the plan was discussed in detail at a meeting convened by Finance Minister Sudhir Mungantiwar for mobilising additional revenue, sources said. Sources also confirmed that the Urban Development and Housing departments have opposed this move for now, claiming that it would come in the way of the government’s plan of making housing more affordable in Mumbai.
The TDR or floating floor space index (FSI) is an important component for builders redeveloping suburban properties because it allow additional construction rights over and above the usual FSI permitted on the plot.
“The move to levy cess on TDR, if approved, will hike construction cost for projects, impacting property prices in turn,” a senior official admitted.