Maharashtra discontinues stamp duty rebate; developers disappointed

Mumbai Metropolitan Region developers expressed their disappointment after Maharashtra government refused to extend the ongoing 2 per cent stamp duty rebate on property registrations valid till March 31, 2021

Chief Minister Uddhav Thackeray, Deputy Chief Minister Ajit Pawar, and Revenue Minister Balasaheb Thorat met on Wednesday to review the decision. CREDAI MCHI, which represents over 1,800 developers from MMR, had submitted a memorandum to Thorat last week seeking an extension of the 2 per cent stamp duty cut by another 12 months as it would help not only the real estate sector, but provide impetus to the economic recovery since more than 250 allied industries are linked with the construction sector.

Though the government refused to extend the stamp duty rebate, it agreed to the developer’s demand to keep the Ready Reckoner rates unchanged for 2021-22. It also decided to continue to the 1 per cent stamp duty rebate for women property owners aimed at encouraging women to be co-owners in family property assets. The government resolution issued by the government laid down a condition that women who take the benefit of the stamp duty rebate cannot transfer the property to male co-owners for 15 years.   

Commenting on Maharashtra goverment's decision about non extension of reduced stamp duty and unchanged ready reckoner rates, Dr Niranjan Hiranandani - MD- Hiranandani Group and National President- National Real Estate Development Council (NAREDCO) said, "Maharashtra government has played a leadership role in rolling out revolutionary measures like stamp duty reduction to augment sluggish real estate market post-Covid pandemic crisis. The extension of this benefit would have played a catalytic role in keeping up the pace of sales and property registration momentum across the micro markets and different housing segments in the state.”

Hiranandani pointed out that the stamp duty rebate had also resulted in increased revenues for the government. “The proven data clearly reflected uptick in volume leading to increased state revenue in second half of FY20-21 and multiplier effect it draws on employment and GDP. Unchanged ready reckoner rates is good, but Industry expected reduction in ready reckoner rates to foster real estate transactions. Hence, NAREDCO requests the state government to kindly reconsider the decision, proving it to be a win-win situation for all." Last year, the Maha Vikas Aghadi government had reduced the ready reckoner rates marginally for Mumbai with little impact on market rates.

Reacting to the developments, Deepak Goradia, President, CREDAI MCHI said, “We are disappointed with the Maharashtra Government’s decision to not extend the stamp duty rebate beyond March 31. Given the current economic climate, the reduction in stamp duty charges not just galvanized homebuyer sentiments, but also enabled the industry to spearhead the state’s economic revival in the post-covid era as well. An extension would have ensured the sustenance of the sales momentum while providing the necessary support to one of the strongest economic pillars and employment generators in the country.”

Goradia said the industry would continue to look forward in continuing the dialogue with the government and make representations to convince the government to to resume the reduced 3 per cent stamp duty rates in the near future

“We are glad that the State Government decided on keeping the ready reckoner unchanged which reflects the market conditions more precisely. The move to provide a 1% stamp duty rebate to women homebuyers is also noteworthy and honours the crucial role and contribution of women towards homebuying,” he said.

The bold step by the Maharashtra government to cut stamp duty rates by 3 per cent till December 31, 2020, and by 2 per cent till March 31, 2021 had reignited the demand for homes that had touch its lowest point in April at the peak of the COVID-19 national lockdown. Maharashtra’s policy initiative was followed by neighbouring Karnataka too. Most developers were in favour of the government continuing with the stamp duty rebate.

Rohit Poddar, Managing Director, Poddar Housing and Development Ltd said “The stamp duty reduction has spurred the sales and registration in Maharashtra to an all-time high, assisting the government in generating more revenue than the actual rates would have yielded. To sustain the momentum, it is essential for the government to extend the stamp duty reduction till March 2022 which in turn would help in generating even more revenue while de-stressing the real estate sector, thereby bringing the economy back on the growth track at high pace.”

Pritam Chivukula, Co-Founder & Director, Tridhaatu Realty and Secretary, CREDAI MCHI said "The State Government's decision to discontinue the stamp duty benefit will be a huge distress for the homebuyers who would have decided to buy their dream home but couldn't do so because of the severe impact of the pandemic. We had requested the Government to extend the stamp duty benefit for atleast a year so that more and more buyers could fulfill their wish of buying their home. We will continue to urge the Government to reconsider their decision and extend the stamp duty benefit further in interest of the homebuyers."

According to international property consultants Knight Frank India, after the stamp duty rebate was announced on August 26, the property registrations have grown incrementally month on month with a staggering 75,688 units registered between September 1, 2020 and March 24, 2021. Home sales achieved its highest ever mark in December 2020 with 19,581 units registered, and a 111 per cent increase over December 2019 registrations. In the run-up to March 31 deadline, the Inspector General of Registrations had clocked nearly 17,000 registrations in March, an increase of 234 per cent over March 2020.  

The Knight Frank India report also pointed out that from September 1, 2020 till March last week, the city exchequer had collected Rs 2578 crore in revenue from apartment sales which was a substantial increase over Rs 1756 crore worth revenue collected between January to August 2020 period.  

Shishir Baijal, Chairman & Managing Director, Knight Frank India said, “The reduction in stamp duty rate has helped mitigate the pain in the long-beleaguered real estate sector of Mumbai. As expected, with the revival of the economy, the sales momentum grew stronger in Q1 2021 and the euphoria amongst homebuyers continued despite the 100-bps increase in stamp duty rates. A combination of lowest home loan rates, reduced house prices along with rebates and payment flexibility offered by developers, as well as increased household saving rates, have provided the right growth environment for the residential segment to grow.”