Munbai: Stamp duty may come down for houses up to 750 sq ft
Creating three new categories for houses with carpet area of less than 750 sq ft, the draft housing policy proposes to reduce stamp duty from 5 per cent to 1, 2 and 3 per cent respectively
The tough task of buying a home in the city is set to get a tad easier with the government planning to reduce the stamp duty and registration fees.
Reducing ambiguity: The stamp duty for the three categories will also be levied based on the market rate instead of the ready reckoner rate. Representation Pic
In the draft housing policy, the government has created three categories of homes with carpet area of up to 70 sq m (approximately 750 sq ft) — Economically Weaker Sections (EWS), Lower Income Group (LIG) and Middle Income Group (MIG, see box). For these three categories, the stamp duty will be reduced from 5 per cent to 1, 2 and 3 per cent respectively.
Also, instead of levying the duty on the higher amount between the market rate (the rate at which the buyer purchases the flat) and the ready reckoner rate (government rates used to calculate taxes), buyers will now have to pay stamp duty on the market rate.
Thus, currently, if a buyer buys a flat which has a market value of R1 crore, but the ready reckoner rate is Rs 1.5 crore, he has to pay 5 % of Rs 1.5 crore, which amounts to Rs 7.5 lakh. After the housing policy comes into effect, however, he will have to pay 1, 2 or 3 per cent of Rs 1 crore, which would amount to Rs 1 lakh, Rs 2 lakh, and Rs 3 lakh respectively based on whether the house falls in the EWS, LIG or MIG category.
The registration fees across all three categories has also been reduced from Rs 25,000 to Rs 1,000. The stamp duty and registration norms will, however, remain unchanged for flats in the High Income Group (HIG) category, which is for flats above 750 sq ft.
Experts say that stamp duty and registration fees are significant expenses for a home buyer, irrespective of whether
a new house is being purchased from a builder or is one that is being resold. This documentation also officially establishes the ownership of the flat.
They say that the reduction in stamp duty and registration fees will make homes up to 750 sq ft more affordable and give builders incentive to construct more such houses.
The draft housing policy, which has been prepared by the state housing department, has been submitted to the housing minister and is expected to be tabled in the Cabinet this week.
State Housing Minister Prakash Mehta said, “We have just got the policy. We will be sending it to all the MLAs and all points will be considered. The points in the policy that do not need much deliberation will be passed and we are expecting that the important parts of the policy will be finalised by the end of the month.”
The great divide
Category Carpet area
EWS Up to 25 sq m (270 sq ft )
LIG Above 25 sq m, below 50 sq m (540 sq ft)
MIG Above 50 sq m, below 70 sq m.(750 sq ft)
HIG Above 70 sq m