To boost the stagnant real estate market hit by COVID-19, the housing ministry decided to reduce stamp duty on real estate housing units.

Reduction of Stamp Duty on Property Registration

On August 28, the Maharashtra government's decision to reduce the stamp duty on property registration was welcomed by the Secretary of Housing and Urban Affairs, Durga Shanker Mishra. He also suggested other states to adopt the same to enhance the real estate sector demand.

He assured the industry that the Ministry would review its various demands including one concerning the need for improvements in the income tax law so that builders can reduce their sales prices in apartments.

The Secretary announced that Rs 9,300 crore investments have been approved from the Rs 25,000 crore stress fund which is planned to complete the stalled housing projects in the whole country.

On demand for a reduction of stamp duty to promote sales during this COVID-19 pandemic, recommendations given to all states to do the same as the government of Maharashtra has done. This will be a successful move of Maharashtra and will have positive results in reducing costs.

On 26 August, the Maharashtra government agreed to cut the stamp duty on the sale deed documents by 3% from 1st September to 31st December 2020 and from 1st January to 31st March 2020 by 2%. At present, the stamp duty rate is 5% in urban areas and 4% in rural areas.

Stamp duty is the transactional tax, collected by the government on the purchase of properties as it is one of the major sources of revenue. Mishra informed the industry to forward its suggestion on the modification of the income tax law to allow builders to cut prices without incurring tax liabilities.

The reduction of stamp duty rates in property registrations will result in significant savings for homebuyers which will boost real estate demand.

By: Shailaja K