The government of Maharashtra has stated that a member of a housing society that undergoes redevelopment need not pay stamp duty on the allotted permanent accommodation as part of the project.
Following this, the member of the housing society undergoing redevelopment is expected to pay only Rs 100 as stamp duty, while the principal agreement between the development and the housing society will be charged as per the conveyance.
On Wednesday, the state government issued a notification to this effect in line with the Bombay High Court’s ruling pronounced in February.
This has put an end to long-drawn litigation pending since 2006 and is a major relief for the real estate sector, especially the redevelopment segment.
“The government’s move will be a major relief for both developers and members of existing society going for redevelopment. Earlier the stamp duty used to be paid twice as the developer had to pay on development agreement for rehabilitation component and even the members had to pay the charges on their Permanent Alternate Allotment Agreement (PAAA),” said Hitesh Thakkar, Vice President, NAREDCO Maharashtra.
In February, the court had set aside and revoked earlier circulars which contemplate that a PAAA executed between the developer and members of the society requires it to be stamped again even though the development agreement executed between the developer and the society is already stamped.
“With large number of dilapidated and old societies awaiting redevelopment, the government’s decision will help expedite the process and provide relief. This will bring down the cost in a big way, impacting redevelopment projects positively,” said Dhaval Ajmera, Secretary, CREDAI-MCHI.
Real estate projects involving redevelopment and rehabilitation are the mainstay of Mumbai’s property market as the land-starved city has few vacant land parcels. The change in the norm will also be beneficial for other key property markets in the state including Thane, Navi Mumbai, Pune, Nashik, and Nagpur.
The state government itself has been pushing the cluster redevelopment of old and dilapidated buildings in the country’s commercial capital with several incentives to encourage more developers to come forward to undertake these projects.
The government’s latest decision is expected to help push redevelopment of many old and dilapidated housing societies across key cities of the state.