The Reduction in Stamp Duty Charges BOON OR A LOSS for the Real Estate?
1.What is stamp duty?
Let’s make this easy to seep in. While buying a house or an immovable asset, it involves various factors, one of which is stamp duty. When there is a transfer of ownership taking place in case of immovable assets, it requires legal ownership & not just physical ownership. The tax involved for the registration of a property exceeding a specific given rate is called stamp duty. This tax is paid to the state government by the buyer. The Stamp Act mentions the assets & instruments which require stamp duty & also involves the stamp duty amount to be paid.
2.Impact of COVID-19.
This unfortunate circumstance has caused chaos across the globe resulting in the downfall of the global economy. In India, the pandemic has caused severe damage to various economic sectors, one of which is the Real Estate. The sudden splash of this disease has brought in negative factors leading to tremendous losses. Amidst this situation, the real estate is suffering due to a lack of potential buyers & sales, causing a reduction in property value. Due to Unemployment & lack of savings, people are unable to invest in properties. To get in track, the Real Estate Developers were repeatedly asking for a reduction in Stamp Duty Charges.
While to curb the situation & to revive the economy, the Maharashtra Government decides to reduce the stamp Duty Charges.
3.To what extent are the stamp duty charges reduced?
This initiative by the government will have a positive impact on Real estate. The Stamp duty rate has reduced by 1% (i.e., from 3% to 2%) since September 1, 2020. The charges are revised (bearing the reduction rate) by the Maharashtra government as follows:
Revised rates of Stamp duty since 1st September 2020 to 31St December 2020
4.What will be the Effects of stamp duty reduction on real estate? Will it help with sales?
The reduction in stamp duty charges is one of the factors to boost sales in the Real Estate Sector. The reduced charges will lower the overall cost of purchase, which will induce the thought of purchase. All in all, the decision made will cheer up many buyers, (i.e.) first-time buyers, dormant buyers, investors ETC. Hence, the stamp duty charges are at ease with an intension to boost the buyers, influencing adequate non-hesitant purchases in real estate. This period is the most accurate for efficient buyers who had been anticipating the change in the rate. The current buyers of ready to move flats will be the ones to enjoy the benefit immediately since the charges have reduced recently. However, this reduction is transitory concerning the economic crash during the unfortunate pandemic. It is nearly applicable for two years, announced in the current budget. Due to which it will lead to more sales anticipating an increase in the future.