‘1% sur­charge on stamp duty may re­strict real-es­tate growth in Ma­ha­rash­tra’

Hindustan Times (Chandigarh) - Estates - - ESTATES - Manoj As­rani ht­spe­cial­prp­jects@htlive.com

The In­dian real-es­tate sec­tor has be­come one of the fastest grow­ing mar­kets in the world.

How­ever, it’s bat­tling chal­lenges that act as road­blocks and re­strict the sec­tor from yield­ing full ben­e­fits of the po­ten­tial growth.

The re­cent pro­posal of the gov­ern­ment to levy a sur­charge on stamp duty of 1% on prop­erty trans­ac­tions will hurt the sen­ti­ment of po­ten­tial home buy­ers, which was seen im­prov­ing.

The state gov­ern­ment is putting Sec­tion 144 F in the Mum­bai Mu­nic­i­pal Cor­po­ra­tion (Se­cond Amend­ment) Act, 2018, to levy ad­di­tional stamp duty on sale, gift and mort­gage of im­mov­able prop­erty. The move has been wel­comed nei­ther by the buy­ers nor by de­vel­op­ers.

This will dam pen the growth of the seg­ment which is seen to be on the path of re­cov­ery. The gov­ern­ment aims to gen­er­ate more rev­enue through this and will use it to fund the ris­ing in­fra­struc­ture need of the city such as metro, mono­rail, bus rapid trans­port

PRO­POSAL OF THE GOVT TO LEVY SUR­CHARGE ON STAMP DUTY OF 1% ON PROP­ERTY TRANS­AC­TIONS WILL HURT THE SEN­TI­MENT OF PO­TEN­TIAL HOME BUY­ERS, WHICH WAS SEEN IM­PROV­ING

sys­tems, free­ways and sea links.

The bill is ex­pected to be tabled dur­ing the win­ter ses­sion of the state leg­is­la­ture marked to be­gin on Novem­ber 19.

If passed, it will be a big hin­drance es­pe­cially for young buy­ers, who have lim­ited bud­get when buy­ing their first homes.

The con­sumer buy­ing cy­cle will also be­come longer as they may de­lay de­ci­sion-mak­ing, which would im­pact the sales ve­loc­ity of the real-es­tate com­pa­nies.

Also, the in­dus­try which is suf­fer­ing from di­min­ish­ing sales, liq­uid­ity crunch and mount­ing non-per­form­ing as­sets will fur­ther be bur­dened with the hike on the ex­ist­ing 5 %, in­creas­ing the cost of real-es­tate deals. Sales of both af­ford­able and lux­ury homes will be un­favourably af­fected by the ad­di­tional stamp duty.

It is high time to un­der­stand that the prop­erty rates in the fi­nan­cial cap­i­tal of the coun­try are al­ready sky­rock­et­ing, mak­ing it one of the costli­est real-es­tate mar­kets in the world.

In such a sce­nario, in­stead of tak­ing mea­sures to mod­er­ate the prop­erty prices in the city, there are new moves be­ing in­tro­duced which will add to the slow­ing down of the seg­ment.

We talk about af­ford­able hous­ing, but, in a sce­nario where the com­mon man is al­ready sad­dled with sev­eral taxes such as GST, prop­erty tax, stamp duty and de­vel­op­ment charges; does it make sense to bring in fur­ther hike on the taxes?

The gov­ern­ment needs to ra­tio­nal is et axes in the real-es­tat e seg­ment if it wants the sec­tor to flour­ish in the long run. Such moves of in­creas­ing taxes will only plague the in­dus­try fur­ther, mak­ing it even worse for the over­all econ­omy.

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