To boost home sales, the Maharashtra government has temporarily reduced stamp duty on residential units from 5% to 2% until Dec 31, 2020. Stamp duty from Jan 1, 2021, until Mar 31, 2021 will be 3%.
In key cities of Maharashtra like Mumbai, Pune, Nagpur, and Nashik, stamp duty rates are 5%, while in other cities it is 6%. Thus, a 3% reduction (2% after December 2020) will result in significant savings for homebuyers.
So, how much will a buyer potentially save?
Let’s assume that a flat measuring 1,000 sq.ft. costs about Rs 15,000 per sq.ft. To this, we have to add parking charges, registration charges, and stamp duty. So, we have:
- Base price: Rs 15,000 per sq.ft.
- Parking charges: Rs 3 Lakh
- Total saleable value: Rs 1,53,00,000 (1,000*15,000+3,00,000= 1,53,00,000)
- Registration charges: 1% of Rs 1,53,00,000, which is Rs 1,53,000
- Stamp duty: 5% of Rs 1,53,00,000, which is Rs 7,65,000
Now, if the stamp duty is reduced to 2%, stamp duty charges will come down from Rs 7,65,000 to Rs 3,06,000, saving Rs 4,59,000.
Best time to buy a home
Welcoming the move, Rajan Bandelkar, President, NAREDCO West said, “This is a great decision favouring homebuyers. Homebuyers should not wait any longer to buy their dream home as this is the best time. This decision is a win-win situation for both developers and homebuyers.”
Reiterating the same, Ram Naik, Executive Director, The Guardians Real Estate Advisory, said, “The timing of this move could not be better as it comes at the back of a substantial reduction in the repo rates. The reduced borrowing cost, negligible transaction cost and developers willing to offer lucrative prices, creates a great opportunity for serious consumers to make a purchase.”
Demand for ready properties to rise
“The reduction in stamp duty will lead to an unprecedented surge in demand for the real estate sector. This will also increase the demand for ready-to-move-in properties as OC ready projects do not attract GST. The reduction in stamp duty will further bring down the transaction cost for such apartments to a negligible percentage,” explained Naik.
More revenue for the government
Giving a different perspective, Anuj Puri, Chairman, ANAROCK Property Consultants, said, “Apart from the obvious homebuyer benefits, the government can generate badly-needed revenue via increased registrations after the most severe downturn in recent history. Affordable and mid-segment properties, which are in maximum demand, would see the most traction from such a move.”
“We hope that this will be a trendsetting move for the other states to follow, boosting consumer sentiments, driving demand, and incentivising all real estate segments, especially at the pre-festive season. A nationwide cut in stamp duty will bring further relief in the national real estate segment and help over 250 allied industries,” concluded Satish Magar, President, CREDAI National.