Effect of Stamp Duty Rates Reduced in Maharashtra for Home Buyers

Effect of Stamp Duty Rates Reduced in Maharashtra for Home Buyers

Effect of Stamp Duty Rates Reduced in Maharashtra for Home Buyers

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Stamp Duty Reduced in Maharashtra!

 

To boost the stagnant real estate market hit by COVID-19, the Maharashtra government on August 26 decided to temporarily reduce stamp duty on housing units from 5 percent to 2 percent until December 31, 2020, sources said.

 

Stamp duty from Jan 1, 2021, until March 31, 2021, will be 3 percent, they said. The decision was taken at the state cabinet meeting on August 26.

 

Real estate developers had been asking for a reduction in stamp duty following the lockdown to encourage homebuyers to purchase properties during the pandemic.

 

In Maharashtra, stamp duty charges are 5 percent in key cities like Mumbai, Pune, Nagpur and Nashik and 6 percent in others. A 2-3 percent reduction in rates will result in significant savings for home buyers.

 

The Maharashtra government on March 6 had announced that it is reducing stamp duty on properties by 1% for Mumbai, MMRDA Region and Pune for a period of two years.

 

The government of Maharashtra has reduced the stamp duty on property registrations to 2% for transactions between September 1 and December 31 from current 5%. The stamp duty will be 3% for agreements to be registered between January 1 and March end.

 

The move, apart from supporting the state exchequer, is expected to support the revival of sluggish real estate market in the state including Mumbai, the country’s most expensive property market.

 

Realty developers expect the reduction in stamp duty charges coupled with the festive offers and other incentives to push sales activity.

 

Following the announcement of lockdown in March, the Maharashtra government had decided to keep ready reckoner rates unchanged for the current financial year in the backdrop of the pandemic.

 

When asked about any probable losses the state may incur due to the reduction in stamp duty, a government official said that these would be notional.

 

Property registration activity in Mumbai had picked up in July bouncing back from the activity witnessed in April-June quarter. While collections from real estate activities were seen improving, it still remained below the pre-Covid19 level.

 

Experts are of view that the timing could not have been better as the home loan rates are also lowest that could boost the conversion of demand into sales.

 

Stamp duty rates in other major states largely hover anywhere between 5-8 percent, but they are lower in some states if property registration is executed in the name of a woman. Delhi, Uttar Pradesh, Rajasthan, Punjab, and Haryana offer relaxation in stamp duty for women buyers. The exemption on stamp duty ranges from 1-2 percent in different states.

 

Why is the home-buying stamp duty reduced?

 

Owing to the current pandemic, the government and residential real estate developers are making efforts to make home-buying attractive. The government wants to influence the buying decision of potential first time home buyers by reducing the cost of owning a home.

 

Stamp duty is one of the bigger expenses in the home buying process. Now that it has been reduced, albeit temporarily, it will mean significant savings for prospective home buyers. E.g., before this reduction, in Mumbai, it was 5% of the property value. Therefore, on a property worth ₹1 crore, a buyer had to pay a stamp duty of ₹ 5 lakhs. So how much has it been revised to now?

 

Understanding the reduction in stamp duty

 

Before this reduction, Mumbai paid a 5% stamp duty on residential property purchases. The other and other key cities like Palghar and Boisar places in the state paid 6%.

 

This reduction will be rolled out in a phased manner all over the state. Between 1st September 2020 and 31st December 2020, it has been reduced by 3%. That means in Mumbai, the effective stamp duty is now down to 2%, while in other places, it is 3% of the property value.

 

From 1st January 2021 to 31st March 2021, the stamp duty on home-buying will be reduced by 2% of the previous rates. Thus, in Mumbai, the effective stamp duty will then be 3%, whereas, in other places, it will be 4%. Let us put these changes into perspective with the example we have seen previously.

 

Let us consider the same property worth ₹1 crore in Mumbai for an easier understanding.

 

Property worth ₹1 crore in Mumbai Before 1st September 2020 From 1st September to 31st December 2020 From 1st January to 31st March 2021
Stamp Duty % 5% 2% 3%
Amount Paid ₹5 lakhs ₹2 lakhs ₹3 lakhs
Savings After Reduction ₹3 lakhs ₹2 lakhs

 

If you look at the table above, you will see that a new home buyer will enjoy substantial savings on stamp duty after the reduction. When you combine this with the tax benefits on your home loan, the savings become even more substantial. So if you’re looking to buy a new home, this is the time to do it.

 

Ready to move Commercial and Residential Properties from BMRI

 

 

Located at 15 min walking distance from station. Situated near to market, hospital, school, temple. It provides the finest for an Ideal Home.

 

It is one of the most reputable address of the city with easy access to many famed schools, shopping areas, hospitals, recreational areas, public gardens and several other public amenities. The Project is at a very good proximity from school, market, banks & station. A location which allows to enjoy a chill breeze of beach on weekend by just driving for 15 minutes.

 

Located next to Virar, it has direct road access to the Mumbai Ahmedabad Highway (NH-8). Mumbai Chhatrapati Shivaji International Airport and Bus stand are also easily accessible from here. In addition, beautiful beaches (Kelva, Mahim and Satpati), ancient forts (Kelva and Shirgaon) and Manor Dam in the vicinity of Palghar make the place an attractive tourist getaway. Maharashtra’s largest fishing center, Satpati is also at a driving distance from Palghar West.

 

Real estate in Palghar is slated for growth, mainly, because of the proposed bullet train which will connect two main cities Mumbai and Ahmedabad. This town lie to the north of Mumbai and are on the periphery of the Mumbai Metropolitan Region.Coming back to the bullet train, the first train is likely to run by 2024. The current travel time between the two cities is 7 hours; the bullet train will cut it down to only 2 hours. 11 railway stations are being proposed along the route; on the Maharashtra side of the border besides the Terminal at Mumbai’s Bandra-Kurla Complex, Thane, Virar and Dahanu are likely to be the other stations.

 

Palghar is placed on the Western Line of the Mumbai Suburban Railway on the Mumbai Ahmedabad rail corridor. And is very easy for everyone to access the railway station. Last year, Palghar was given district status making it the Thirty Sixth district in Maharashtra.

 

Why should you invest in Palghar?

Palghar as a city is a bustling industrial and educational hub servicing the villages around it. The town is well accessible by road and railway transportation services. Palghar is directly connected to towns such as Miraj, Pune, Thane, Aurangabad, Ahmednagar, Kalyan, Alibaug , Bhusaval, Shirdi and Nashik. It is an important station on the Western Railway line of the Mumbai suburban railway which makes it really easy for people to travel long distances.

 

CIDCO developed & planned Navi Mumbai, & has been given the authority to develop the new district now Imagine Navi Mumbai 10 years back, Palghar is that opportunity today!

 

About BM Group

 

BM Group (BM™) is a company established in early 90’s and is based in Mumbai, India. BM Group (BM™) serves for Property Development and Real Estate Consultancy of residential, commercial, warehouse, land, and retail leasing in different regions of Mumbai, Palghar, Thane, Ahmedabad, and Rajkot.

 

Membership Benefits

We at BM Realtors & Investors, LLP have always saved a soft corner for you while offering our spaces which now come with a benefit exclusively designed for you to feel the luxury of being attached to us. The time has approached to express our soft corner by turning it into reality and stepping ahead to come closer to you with a long lasting relationship with you and your generation next. Join the Boon Club

Kapil Desai
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