Cut in stamp duty to give a fillip to ailing realty sector
In an exclusive interview with the Free Press Journal, Dr Niranjan Hiranandani, the national president of NAREDCO, explains how the Maharashtra government’s decision to reduce stamp duty will be a win-win situation that fares for all the involved stakeholders.
What will be the impact of the Maharashtra government's decision to temporarily reduce stamp duty on the ailing realty sector?
Till now, all the fiscal measures announced by the government machinery have been focused on the supply-side creation and lacked a demand booster. The stamp duty relief announced by the Maharashtra government, in the backdrop of the festive season, has rightly addressed the simmering issue of demand shock creation to bolster the consumption. The liquidityand labour-strapped real estate sector will get some respite with an increased housing demand. The booster dose shall augur well across metro cities and metropolitan regions, wherein the pent up demand shall witness actual sales closures with resale deals notching up too.
The lower home loan interest rate now coupled with reduced stamp duty should nudge fence sitters to convert into actual home buyers. The fiscal advantage leads to good savings, which should entice the discerning homebuyers to close the deal.
With festive seasons like Ganapati, Dussehra and Diwali around the corner, discerning home buyers will be compelled to make a purchase decision to grab the relief benefits, leading to increased property registrations. The surge in property registrations will increase government revenue treasures, as we witness an uptick in housing sales. The enhanced sales will draw much needed liquidity for the developers- a sigh of relief. Hence, it is a win-win situation that fares for all the involved stakeholders.
What we understand is that the stamp duty cut is only for agreement for sale and not for land or lease or gift or development agreements. What is your take?
The announcement mentioned home buying, so it is not very clear whether land or lease or gift or development agreements are included. If not, one hopes that the state government, after seeing the positive impact on home sales, will consider extending it to the remaining segments too. As I understand it, the whole idea is to create a ‘demand push’, which is much needed to encourage consumption.
The government has not yet addressed concerns over high ready reckoner rates. What is your comment?
Maharashtra’s real estate seeks and welcomes any further support extended to the ailing sector, as its revival is imperative for job creation and economic growth. Any positive measures by further rationalizing the duties, levies and taxes will foster demand creation – a need of an hour. Industry pegs hope on long pending demand to rationalize ready reckoner rates in the state, which will further persuade fence sitters to make the right decision of buying.