As Maharashtra gears up for upcoming assembly elections, real estate developers have proposed a significant reduction in stamp duty, urging the state government to lower the current 5% rate to 3%. The move, according to industry experts, aims to stimulate the real estate sector and boost property transactions across the state, offering a potential boost to government revenue while making homeownership more accessible, especially for first-time buyers. Developer associations, including CREDAI (Confederation of Real Estate Developers Associations of India), have formally written to Housing Minister Atul Save and Chief Minister Eknath Shinde, outlining their proposal.
According to recent reports by ET Realty, Real estate associations are advocating for a reduction in stamp duty, arguing that it would stimulate more transactions and ultimately enhance revenue collection, even at a lower rate. They believe this strategy could replicate or even exceed the positive outcomes observed during the 2020-21 financial year, when similar reductions led to significant market activity.
By lowering the stamp duty to 3%, the state could provide a more affordable entry point for first-time homebuyers. The real estate sector has long been recognized as a critical driver of economic activity in Maharashtra, and reducing transaction costs is expected to increase property ownership rates, thereby providing financial security to families. Developers also suggest that this move could discourage buyers from resorting to unauthorized constructions, which have historically plagued the state's housing sector, particularly in urban areas.
Beyond the direct benefits for homebuyers, this proposed change is viewed as advantageous for the broader economy. Experts argue that an increase in property transactions would enhance city planning and infrastructure development, contributing to the overall health and living conditions of residents in newly developed or redeveloped areas.
Over the past six months, Maharashtra has seen a steady pace of property registrations. Data from the state's property registration department indicates that approximately 13.33 lakh documents have been registered, generating nearly INR 25,957.57 crore in revenue-almost half of the state's annual target. Property registrations have consistently exceeded 2 lakh each month, except for September, which experienced a slight decline to 1.9 lakh due to the inauspicious Pitra Paksh period.
Despite this temporary slowdown, registration numbers reflect a resilient market. Officials note that property transactions have remained strong for two consecutive quarters, with no significant decline in demand for real estate in the state.
However, some government officials express skepticism about the proposal. While the demands of the real estate sector have been acknowledged, revenue officials caution that reducing stamp duty could undermine the state's finances, particularly concerning ongoing social programs and budgetary allocations. The property registration department is crucial for funding the state's initiatives, and any reduction in stamp duty could jeopardize these schemes, they warn.
In response, some revenue officials remind stakeholders that previous discussions have ruled out the possibility of reducing the duty, as the government has already introduced several financial relief measures and schemes. The state has maintained constant Ready Reckoner (RR) rates, a key factor in property valuation, and is unlikely to change this in the immediate future.
Developers contend that lowering stamp duty would not only help sustain the positive market outlook for the real estate sector but also contribute to the state's broader economic recovery. Industry representatives assert that reducing the cost of homeownership through lower stamp duty would stimulate demand for both residential and commercial properties, supporting the overall market and creating jobs in construction, real estate, and related industries.
With Maharashtra setting a target of INR 55,000 crore in property registration revenues for the current financial year, the state's ability to maintain high registration levels will be crucial for funding public welfare schemes and infrastructure development.
Despite differing opinions, the proposal to lower stamp duty remains a key topic of discussion among developers, real estate associations, and government officials. As the election approaches, it remains to be seen whether the state government will take steps to balance economic growth with revenue needs, and whether the real estate sector will receive the support it seeks in the form of reduced transaction costs.
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