Mah plans stamp duty cut for EWS homes
- 18th May 2015
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In a move that is expected to provide major relief to lakhs of home buyers in Mumbai and the rest of the state, the Maharashtra government is said to be contemplating a reduction in the stamp duty rates payable on homes measuring upto 753 sq.ft. that target the economically weaker, lower income and middle income category of home buyers in the state.
According to informed sources, stamp duty rates are likely to be rationalised to:
- 1 percent on homes for economically weaker sections
- 2 percent on homes for low income group (LIG) categories
- 3 percent of the agreement value for homes that target the middle income category (MIG) of home buyers.
Maharashtra's draft housing policy defines EWS homes as residences measuring upto 269 sq ft, LIG houses between 270-538 sq ft and middle-income homes as those measuring from 539-753 sq ft.
Any residence exceeding this area is categorised as a higher income dwelling. As per the proposal the registration charges for these houses will also be lowered to the standard INR 1,000 per transaction from the prevailing levy of INR 25,000.
Buyers belonging to the high income group (HIG) category will however continue paying stamp duty at the current rates. The move, if implemented is expected to make housing more affordable for the weaker sections of society currently facing the brunt of the high prevailing property prices in the city and elsewhere in state.
As per existing rules in force, home buyers have to pay 5 percent stamp duty on the government specified Ready Reckoner rates or the prevailing market areas for homes in that area – whichever is higher.
The state government's draft housing policy, that has proposed these changes, has also proposed that the stamp duty on homes in these categories will be calculated on the basis of their market value at which the sale is concluded as defined in the agreement.
Ready Reckoner rates are revised on a yearly basis and were last revised earlier this year when the state government had hiked the RR rates by over 30 percent for most parts of the city, with the result that the rates were higher than the market value in many localities.
Among the areas worst affected by this hike were prime residential locations in the city like Chembur, Goregaon, Malad, Borivali and Ghatkopar where rates shot up by as much as 35-40 percent.
The government's latest initiative to lower stamp duty rates and the base for such levies is expected to benefit home buyers specifically in areas where the RR rates have exceeded market value with the applicable stamp duty now likely to be effectively lower.
In a similar move earlier this year, the state government had waived of stamp duty applicable on the transfer of immoveable property by its owner to an heir or family member.
As per norms of the Maharashtra Stamp Duty Act, the stamp duty payable in case where property was being gifted to a family member was approx 2 percent of the property's market value while the transfer of property that did not fall in the category of ancestral property was charged at 5 percent.
Further an additional stamp duty of INR 200 was also payable on a release deed with regard to an ancestral property.
The government had also announced that the scheme for online registration of property sale transactions in the state would be extended to enable property buyers to register their property without having to physically visit the registration office to complete the formalities.
A similar facility is already in place on a voluntary basis for leave and license property transactions.
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