Reduced Stamp Duty in Maharashtra Will Boost The 2020 Real Estate Market
With the whole world being hit by the Covid-19 pandemic, the economy in India is also seeing its negative effects. This has affected the financial budgets not just on a government level but also at a household level, further affecting the environment of the current real estate market. Homebuyers require additional incentive as well as more acquirable purchasing power to be able to consider investing in real estate at the moment. That is why, in an effort to boost the declining real estate market, the Maharashtra government has recently decided to reduce stamp duty on housing units for a temporary period. This move promises to increase buyer sentiment and generate revenue in the declining real estate market.
Stamp duty is an amount payable to the state as part of the Maharashtra Stamp Act which was passed in 1958. This amount is calculated on the basis of ready reckoner rates and the property value mentioned in the buyer-seller agreement. The stamp duty also varies as per the location of the property. The recent amendment of this Act, decided in a cabinet meeting held on August 26, 2020, included a revised stamp duty on gift deeds, e-payment of stamp duty, revision of penalty clauses and increment of stamp duty under certain instruments clauses.
Generally, the stamp duty charges are 5% in key cities like Mumbai, Pune, Nagpur and Nashik and 6% in others. Now, with the amendment in place, the stamp duty will be reduced in two slabs — by 3% from September 1, 2020 to December 31, 2020 and by 2% from January 1, 2021 to March 31, 2021. This means that there is currently a massive reduction of up to 3% in stamp duty rates which brings Mumbai stamp duty to a low of 2%. All of these factors are aimed towards motivating home buyers with attractive savings and a convenient online payment process.
Real estate developers who had earlier been grappling with unsold inventory will get some respite since the demand is now expected to pick up. Although the reduction in stamp duty is temporary, analysts believe that it will be a significant growth driver for the residential real estate market, especially in the cities of Mumbai and Pune. It is also a win-win incentive for developers and buyers since it will increase the speed of deal closures to fit this temporary decrease in amount.
