Housing and Urban Affairs Secretary Durga Shanker Mishra on Friday hailed the Maharashtra government's decision to reduce stamp duty on registration of properties and advised other states to do the same to boost demand in the real estate sector. Addressing a webinar organised by industry body PHDCCI, he assured the industry that the ministry would examine its various demands, including one regarding need for a change in income tax law to enable builders reduce their selling prices of apartments.
The secretary said an investment of Rs 9,300 crore has been approved from the Rs 25,000-crore stress fund, which was set up to complete the stalled housing projects across the country. On the demand for stamp duty reduction to boost sluggish sales during this COVID-19 pandemic, Mishra said, "We had given suggestions to all the states to reduce it. The Maharashtra government has done it. We will pursue with others (states). It's a good step by the Maharashtra government. It will have a positive impact on cost reduction." On Wednesday, the Maharashtra government decided to slash stamp duty on sale deed documents by 3 per cent from September 1 to December 31, 2020, and by 2 per cent from January 1, 2021 to March 31, 2021. Currently, the rate is 5 per cent in urban area and 4 per cent in rural area.
Stamp duty is the transactional tax, collected by the government on property purchases. It is one of the major sources of revenue. Mishra asked the industry to send its suggestion related to change in the income tax law for enabling builders to reduce prices without incurring any tax liabilities.
Gaurs Group Managing Director Manoj Gaur said if builders reduce prices more than 10 per cent below ready reckoner rates, there is an additional tax burden on developers and also buyers. "We will examine your suggestion. If we are satisfied, we will take up this issue with the finance ministry," Mishra said.
The secretary said there has been considerable improvement in ease of doing business in the real estate sector and construction permits are being given online. Mishra also clarified that public sector companies and development authorities involved in building and selling real estate projects would have to be registered under the RERA law.
On the newly launched Affordable Rental Housing Complexes (ARHC) scheme for migrants and urban poor, he said this would be a game changer in creating market for rental housing. Mishra said the government has finalised model tenancy law and is likely to be approved in the next one months. It will then be sent to states/UTs for adoption.
The model tenancy law has been further simplified compared to the draft proposal, he said. The ministry had in July 2019 floated the draft model tenancy law, which proposed that landowners will have to give a notice in writing three months before revising rent. It advocated appointing a district collector as rent authority and heavy penalty on tenants for overstaying.
Last month, the Union Cabinet approved this ARHC scheme, under which existing vacant government-funded housing complexes will be converted into Affordable Rental Housing Complexes through "concession agreements" for 25 years. ARHC is a sub-scheme under the Pradhan Mantri Awas Yojana-Urban. The concessionaire will make the complexes livable by repair or retrofit and maintenance of rooms and filling up infrastructure gaps such as water, sewer, sanitation, road and related work.
Earlier, PHDCCI President D K Aggarwal demanded reduction in stamp duty and GST as well as infrastructure status for the entire real estate industry. He also suggested to increase the size of stress fund to Rs 1 lakh crore from the current Rs 25,000 crore.
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