In a bid to encourage buying in the retail sector hit by COVID-19, the Maharashtra government on Tuesday temporarily reduced stamp duty on housing units from 5 per cent to 2 per cent until December 31, 2020.
According to a report by Moneycontrol, stamp duty from Jan 1, 2021, until March 31, 2021, will be 3 per cent. The decision was taken at a state cabinet meeting held on Tuesday.
Real estate developers had been asking for a reduction in stamp duty following the lockdown to encourage homebuyers to buy properties during the pandemic.
"The move will benefit the customer and foster demand creation along with giving a stimulus to the allied industries coupled with employment generation. Whenever there has been a reduction in the stamp duty in the past, it has only lead to an increase in revenue in the government treasury, said Jaxay Shah, Chairman, CREDAI National.
“This is a proactive measure taken by the government and was most needed. It will provide buyers an incentive to buy homes, give them the option to take a decision to buy,” Satish Magar, national president of the Confederation of Real Estate Developers' Associations of India told Moneycontrol.
In Maharashtra, stamp duty charges are 5 per cent in key cities like Mumbai, Pune, Nagpur and Nashik and 6 per cent in others. A 2-3 per cent reduction in rates will result in significant savings for home buyers.
The Maharashtra government on March 6 had announced that it is reducing stamp duty on properties by 1% for Mumbai, MMRDA Region and Pune for a period of two years.
Stamp duty rates in other major states largely hover anywhere between 5-8 percent, but they are lower in some states if property registration is executed in the name of a woman. Delhi, Uttar Pradesh, Rajasthan, Punjab, and Haryana offer relaxation in stamp duty for women buyers. The exemption on stamp duty ranges from 1-2 percent in different states.