The West Bengal government has ended temporary tax breaks for the real estate industry, including a 2% reduction in stamp duty and a 10% decrease in the circle rate, which were introduced in October 2021 to aid pandemic recovery. These breaks, extended multiple times, expired on June 30th, 2024. The real estate industry, led by Sushil Mohta of CREDAI West Bengal and Merlin Group, expressed disappointment, highlighting that these breaks significantly boosted the sector and state revenue. Mohta urged the government to reconsider, suggesting further reductions in stamp duty and circle rate revisions. Despite concerns, the industry remains hopeful due to increasing urbanisation and rising disposable incomes.
The West Bengal government has announced the end of temporary tax breaks for the real estate industry. These breaks included a 2% reduction in stamp duty, a tax paid on property purchases, and a 10% decrease in the circle rate, a government-determined minimum property value used for taxation purposes.
The tax breaks were introduced in October 2021 to help the real estate sector recover from the economic slowdown caused by the COVID-19 pandemic. They were extended several times, with the last extension expiring on June 30th, 2024.
The real estate industry expressed disappointment with the decision. Sushil Mohta, president of CREDAI West Bengal (Confederation of Real Estate Developers' Associations of India) and Chairman of Merlin Group, highlighted the benefits of the tax breaks. He said they helped boost the pandemic-hit sector, which is a significant employer and contributes substantially to the state's revenue. Mohta stated that property registrations generated INR 7,500 crore (approximately USD 937 million) for the state in 2023.
Mohta urged the government to reconsider the decision. He suggested revisions to the circle rate to allow developers to re-evaluate pricing for residential properties. Additionally, he called for a further reduction in stamp duty to continue supporting the industry.
Despite the removal of tax breaks, the industry remains hopeful. Mohta believes the sector will continue to grow due to factors like increasing urbanisation and rising disposable incomes.
The West Bengal government's decision to end tax breaks for the real estate sector, which were in place for over two and a half years, raises questions about the future of the industry. While the industry expresses concerns, it also acknowledges positive long-term trends like increasing urbanisation and rising disposable incomes. It remains to be seen how the removal of these breaks will impact property prices, sales, and overall economic activity in the state.
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