The state government’s decision to charge homebuyers an additional 1 per cent on the existing 5 per cent stamp duty is set to squeeze the real estate industry.
Stakeholders are in a funk over the prospects of realty market, which is already said to be traversing dire straits business-wise, what with the unsold inventory. Now, buyers investing in under-construction housing projects, who already pay up to 12 per cent goods and services tax, will have to shell out 6 per cent stamp duty, in addition to the registration fee, which is 1 per cent or up to Rs 30,000.
Many developers want the government to reconsider the decision, as they feel the decision will drive investments by the middle classes from realty to gold and equity markets.
Jaxay Shah, president, CREDAI National, an influential real estate body, said, “We acknowledge the commendable work being done to enhance Mumbai’s infrastructure, but the increase in stamp duty rate on immovable property will add to the already high costs and taxes being paid by homebuyers. This is not in their best interests.”
Plus, homes will become even more unaffordable. Farshid Cooper, managing director of Spenta Corporation, said, “While infrastructure development is crucial to the city’s growth, the additional 1 per cent stamp duty will raise concerns about affordability of homes. If the sales velocity is impacted, it could delay the prime minister’s vision of homes for all by 2022.”
Rajat Rastogi, executive director, Runwal Group, said the government should reconsider the decision. “The hike is one more challenge to developers as it is an additional burden on customers, especially for bigger home buyers,” he said.
Devang Varma, director, Omkar Realtors, said that the additional duty would be an entry barrier to realty which will push middle-class customers to more speculative and risky investment classes of equity and gold, rather than a stable long-term investment in a home. “We are hopeful that this additional burden will not be levied on customers,” he said.
NO SHELTER FROM TAX STORM
Realty traders want govt to reconsider the decision as it will add to the burden of homebuyers
5% Existing stamp duty on buying a home 1% The state government’s proposed surcharge 12% GST on buying an under-construction apartment 1% Registration fees charges on a house
BUYERS HIT HARD
- If a homebuyer is spending Rs 1 crore on a flat in an under construction project, they would be spending up to Rs 18 lakh more: 12 per cent GST which accounts for Rs 12 lakh, and Rs 6 lakh as 6 per cent stamp duty.
- The additional charge would be an entry barrier to realty which will push middle-class customers to more speculative and risky investment classes of equity and gold, market experts say.