Stamp duty hikes in Mumbai likely to inflate property prices
Land prices are likely to increase for Mumbai as state imposes 6% surge on stamp duty for property purchases
In order to improve the infrastructure of the metropolitan, the Maharashtrian government has intended to levy one percent charge on the stamp duty for property purchases in Mumbai. In lieu of the increase, the real estate market, as well as the property buyers, are likely to suffer negatively.
The duty hikes are to support the infrastructural needs. On November 27, the State Legislative Assembly passed a Bill that allows it to impose the additional stamp duty, in the form of a surcharge. Already succumbing to the high tax rates, the real estate transactions are expecting a drop.
Introducing section 144F in the Mumbai Municipal Corporation Act, 1888 (Second Amendment), the state government will put an additional stamp duty on the property sale, lease, and will also extend the imposes on gift and mortgage. The current stamp duty on realty in Mumbai equals to five percent, which will ascend to six percent, making properties more costly.
Additionally, one percent of the property value as registration charge is to be paid by the buyers, apart from the stamp duty.
How is Stamp Duty calculated?
On the property agreement value or the ready reckoner rates (whichever is higher), a percentage is imposed which is known as the stamp duty.
How will the levy affect the current real estate market?
The funds collected from the stamp hike will be utilized in construction and infrastructural developments. A senior authority from the BMC informed that “This move has been taken, to ensure that some projects like the metro rail, monorail, the coastal road, and freeways, have enough funds for smoother functioning and to ease the commute and lessen the road traffic.”
According to the real estate market experts, the move of levying extra stamp duty on the property transactions will dampen the trade in the market.
Mumbai, being one of the most expensive real estate markets in the world, has not seen a considerable restraint in its prices, despite the low sales volume of the sector in India.