The real estate sector is hoping chief minister Basavaraj Bommai’s maiden budget will propose encouraging steps like reduction of duties and guidance value to speed up recovery from the pandemic-induced slump.
Their demands include a reduction in property prices by slashing the guidance value, a fixed minimum selling price at which a property can be registered, and reduction in stamp duty for all residential properties irrespective of price tags.
But officials say these demands were addressed – at least partially – and the CM may not heed them. The government reduced guidance value by 10% for three months from January, but, since the response was good, stakeholders want the benefit extended through the new financial year beginning April 1.
Stamp duty on registration of residential flats priced between Rs 20 lakh and Rs 45 lakh was reduced from 5% to 3% last year. The previous budget had slashed duty to 2% for flats priced below Rs 20 lakh.
But developers want the cap removed and want the government to levy a flat 3% stamp duty for all properties priced above Rs 20 lakh at least for six months from April.
“Reduction of guidance value and stamp duty is in the interest of both the sector and the state exchequer,” said Bhaskar T Nagendrappa, president, CREDAI-Bengaluru, who recently led a delegation to meet the chief minister.
Nagendrappa reasoned a reduction in guidance value will help the government mop up revenue as the minimum price fixed is more than the market value in some places, and both sellers and buyers are showing a lower value than the actual price while registering properties.
“Also, the Rs 45 lakh cap on stamp duty does not benefit most home buyers since it’s hard to find property priced at less than Rs 45 lakh in cities like Bengaluru,” said Nagendrappa. “Consumption will improve if guidance value and stamp duty are reduced. ”
His argument is based on a spike in property registrations after the guidance value was reduced in January. Officials say about 20,000 more documents were registered against the monthly average of 1. 5 lakh documents in January and February, and the department earned Rs 60 crore more than the average during the period. “We have collected Rs 11,910 crore in stamp duty so far as against a target of Rs 12,655 crore. We may earn about Rs 13,000 crore by March end,” said Ravindra PN, inspector general of registration and commissioner of stamps.
