HOW JUS­TI­FIED IS THE STAMP DUTY HIKE

The Ma­ha­rash­tra state gov­ern­ment de­ci­sion of in­creas­ing 1% on stamp duty to fund in­fra­struc­ture projects in the state will surely hurt the real es­tate sec­tor.

Realty Plus - - Contents - Text: Sapna Sri­vas­tava

How ra­tio­nal is it to levy a sur­charge of 1% on stamp duty, in­creas­ing it to 6% from the ex­ist­ing 5% at a time when the gov­ern­ment talks about mak­ing hous­ing af­ford­able and pro­vid­ing Hous­ing for All? In the name of gen­er­at­ing rev­enues for the in­fra­struc­ture projects like Metro project, Mono Rail, Sea links and High­ways, the state gov­ern­ment in­tends to milk the real es­tate sec­tor which is still not over the im­pact of GST.

As a mat­ter of fact, GST was sup­posed to sub­sume all other taxes but prop­erty buy­ers con­tinue to pay stamp duty and reg­is­tra­tion fees in ad­di­tion to GST. Farshid Cooper, Manag­ing Di­rec­tor, Spenta Cor­po­ra­tion rightly ex­presses his con­cern when he said, “While in­fra­struc­ture de­vel­op­ment is cru­cial to the growth and pros­per­ity of the city, the ad­di­tional 1% stamp duty an­nounced by the state gov­ern­ment will cer­tainly im­pact cus­tomers neg­a­tively. In ad­di­tion to 12% GST, 6% stamp duty will start to raise con­cerns about the af­ford­abil­ity of homes in the city. With sales ve­loc­ity be­ing im­pacted, this de­ci­sion could de­lay the hon­orary prime min­is­ter’s vi­sion of homes for all by 2022.”

An­other ma­jor con­cern is the uti­liza­tion of funds gen­er­ated by in­creas­ing stamp duty for the in­fra­struc­ture projects. In­deed, the city’s real es­tate mar­ket will get a boost with bet­ter phys­i­cal in­fra­struc­ture fa­cil­i­ties but if the rev­enues are not de­ployed cor­rectly, it might de­feat the whole pur­pose and mo­tive of the state gov­ern­ment. Ac­cord­ing to the statis­tics pre­sented by Ra­jan Ban­delkar, Pres­i­dent, NAREDCO West, this year, the Depart­ment of Reg­is­tra­tion and Stamps has a tar­get of Rs 24,000 crore. The col­lec­tions for 2016-17 were Rs 21,026 crore which was marginally lower than Rs 21,657 crore in 2015-16.

Also, the move seems un­fair to those home­buy­ers who have al­ready bought their flats tak­ing into con­sid­er­a­tion their bud­get & af­ford­abil­ity and will be sev­erly im­pacted by the hike even pulling out of the un­der con­struc­tion projects. Shishir Bai­jal, Chair­man and Manag­ing Di­rec­tor, Knight Frank In­dia con­curred that the big­gest im­pact will be on the af­ford­able homes and mid seg­ment cat­e­gory, since a 1% in­crease will be seen as a sig­nif­i­cant out­flow, thereby putting many in a wait-and-watch mode. “This es­ca­la­tion will ham­per the pur­chase de­ci­sions of fence sit­ters who were warm­ing up to the idea of buy­ing a home on the back of sta­ble cap­i­tal val­ues that have re­mained un­changed in the past 4- 6 quar­ters,” he added.

It is a para­dox that on one side the Gov­ern­ment is of­fer­ing mul­ti­ple sops to boost af­ford­able hous­ing and on the other is ad­ding to the tax bur­den of the home buy­ers. Taxes have been in­creased pre­vi­ously as well for the rea­son of eco­nomic & phys­i­cal de­vel­op­ment but the pos­i­tive im­pact on city realty is still elu­sive.

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