Stamp duty on TDR deals cut to 3%

The Maharashtra government's decision to classify transfer of development rights (TDR) as 'moveable property' has effectively resulted in slashing the stamp duty levied on TDR transactions from the existing 10 per cent to three per cent.

Confirming this, secretary, relief and rehabilitation Krishna S Vatsa, told Business Standard: "The TDR has been classified as moveable property. The effective rate of stamp duty on moveable property is three per cent and hence the same would apply to TDR transactions. The decision has yet to be formalised and will take a day or two."

Welcoming the move, the Maharashtra Chamber of Housing and Industry (MCHI) has said that the decision will give a boost to the property market.

Vatsa said the decision would not result in a decrease in revenue generation for the state government (on account of stamp duty) adding that: "On the contrary, the volume of transactions in TDR property will go up and the revenue generation will increase. In the current 10 per cent regime, many people were not registering their TDR transactions."

MCHI honorary secretary Sunil Mantri said: "By reducing the stamp duty on TDR, the state government has taken a revolutionary step in the interest of the common man and is sure to benefit the masses at large."

Mantri said: "The reduction in stamp duty will encourage and increase property sales. The property market will boom again as the end user will once again look at investment options and this will give a huge fillip to the housing sector."

Paying stamp duty at 3 per cent of the valued property will not only encourage end users to legally register and pay the stamp duties but will also make housing affordable and reasonable as against when a 10 per cent levy was in force, he said.

Any purchase or transfer of immovable property attracts a certain rate of stamp duty in India and in Maharashtra the stamp duty charges are (10 per cent) on outright sale of property and the registration costs of a transaction is also very steep.

These high transaction costs had led to minimal change of hands of real estate holdings. However, with this notification, the scenario is bound to change and will give a major boost to the housing sector, a MCHI release issued here states.

The MCHI has also welcomed the move for giving on total exemption (from 10 per cent proposed) to BMC/TMC for various lands acquired for public purpose as this will help BMC to acquire additional number of properties which can be utilised for public purposes such as roads, gardens and schools.

The earlier decision to impose stamp duty on TDR had been opposed by the Municipal Corporation of Greater Mumbai (MCGM), the released stated, adding that the corporation's deputy chief engineer II, A S Nabar had agreed with the chamber's view that the stamp duty on TDR would result in the purchaser of property having to pay a 20 per cent duty.

The result would be that the builder would pass on this additional burden to the flat purchasers, as a result property prices would escalate.

More than 500 proposals pending currently with the BMC on account of heavy stamp duty rates are expected to be cleared soon which will usher in development activity on a larger scale in Mumbai city.

In addition, the move would also encourage purchasers to register their properties.