State government proposing a hike in both residential and non residential purchasers would have to pay a five percent stamp duty on the market value of the property in Mumbai or an additional of Rs. 17400 per transaction. Government has deleted Article 25(d) of the Bombay Stamp Act, 1958 which was essentially for residential property in Mumbai.
With this, the residential and non-residential transactions are brought at par. The stamp duty in Mumbai was charged at Rs. 7600 however its increased to Rs. 25000 per transaction or a 3.48 % additional for proceeding up to Rs. 5 Lakh.
On an average, around 2000000 such transactions take place annually in Mumbai alone this translates that the government would get an increase of Rs. 350 Crore.
Realty panelist, however observe that the move may not have an immediate impact and would not turn a sure-shot homebuyer into a fence sitter. On an immediate basis, there would not be any significant change in demand. However, more and more tenant in cities like Mumbai and Pune would begin showing a preference for owned instead of leased property in Mumbai as this might build additional money sense.
This is additional evident in Mumbai as this town sees a better incidence of leasing the residential property in Mumbai on the account of the high price of possession. Less costly cities like Pune would show a lower and slower impact. Developers illustrate that though it's change that ought to not are ideally announced at this stage when home consumers are waiting within the wings, the change will increase the price by not a really huge quantity.
As the Director of Sanghvi Group of Companies stated that, the move will certainly make it difficult for home buyers since this will be an addition to the existing VAT and several other taxes incurred. With such policies and laws amended from time to time, call creating becomes a challenge leaving the home buyers in an exceedingly pool of complication. This modification ought to are announced once and for all in January alongside the prepared Reckoner.
As the proposed hike is not going to affect the sentiment of an urban home patrons. Prima facie it won’t affect a buyer within the city limits while the realty market beyond in gram panchayats would witness some effect though. The proposed increase is insignificant and will not make any difference to the market sentiment in general.
The Stamp and Registration department is a major revenue generator for the state government. As last year the department had collected approximately Rs. 14000 Crores from all over Maharashtra. The state government announcing an increase in the stamp duty rate by a minimum of 10 and a maximum of 30 percent as a result there could be slowdown in property transaction the city.
Developers observe that customers should not let this small amendment change their decision of buying residential property in Mumbai. On a positive note, with the Reserve Bank of India (RBI) reducing the home loan interest rates, as the home buyers will be able to offset the rise in stamp duty. As they should make a calculated decision and not let the slight increase impact their decision.