Maharashtra Government Reduces Stamp Duty To Boost Ailing Real Estate Sector
The move is expected to revive the state’s economy and developers who have been battered by the Covid-19 outbreak.
The Maharashtra government has decided to reduce stamp duty on real estate transactions between Sept. 1, 2020, and March 31 next year as part of measures to revive the state’s economy and developers who have been battered by the pandemic.
The duty will be reduced in two slabs, according to an official statement.
- There will be a 3% reduction in stamp duty between Sept. 1 and Dec. 31, 2020.
- A 2% reduction between Jan. 1, 2021, and March 31, 2021.
The move comes after several real estate bodies had sought the reduction to boost property sales. Sales in India, and Maharashtra—which houses India’s most expensive property market, Mumbai—were slowing even before the pandemic struck.
The announcement is over and above the 1% reduction in stamp duty for two years that the state government had announced in its maiden budget in March.
Real estate players welcomed the decision.
The Maharashtra Government’s decision to reduce the stamp duty from 5% to 2% till Dec. 31 augurs well for the revival of realty in MMR (Mumbai Metropolitan Region) and is a much-needed boost to the ailing sector amid the pandemic, Nayan Shah, president of Credai-MCHI—an umbrella body representing developers—said in an emailed statement.
“The reduced cost of stamp duty is bound to encourage first-time homebuyers, fence sitters as well as resale flat buyers to invest in real estate,” he said. “Coupled with the festive season, we expect demand to pick up significantly which will provide a huge respite not only to home buyers but also to developers who have been suffering amid low demand and limited cash flow availability due to Covid-19.”
Ram Raheja, director of S Raheja Realty, said it’s “commendable that they also put a timeline to it (the duty concession), which encourages people to buy sooner rather than later”.
Pankaj Kapoor, founder and managing director of the real estate consultancy Liases Foras, said the move will help stimulate demand.
“It should be noted that (property) registrations in MMR and Pune regions have plummeted to 31% and 35% of pre-Covid levels,” he said. “The state government has done its part. Perhaps now if the central government also considers increasing interest exemption limit for homebuyers, it will certainly boost dried-up demand.”
Shishir Baijal, chairman and managing director of Knight Frank India, agreed. “We expect this to provide a temporary relief to end users looking for relaxation to complete their impending purchases,” he said in a text message.
“For fully-constructed properties, there’s no GST applicable as well,” Bhavin Thakker, managing director, Mumbai & Head, Cross Border Tenant Advisory, Savills India, said. “Moreover, developers are already offering reduced prices and freebies. A combination of all these will prove to be a good offering for buyers.”