Mumbai's poor stamp duty collection last month amplifies call for another rebate

Mini

The Maharashtra Government’s decision to revert to stamp duty of 5 percent this fiscal has translated to tepid housing sales in Mumbai last month.

Mumbai's poor stamp duty collection last month amplifies call for another rebate
The Maharashtra Government’s decision to revert to stamp duty of 5 percent this fiscal has translated to tepid housing sales in Mumbai last month. As per data recorded on the CRE Matrix Property Tracker and IGR Maharashtra, only Rs 7,246 crore worth of property transactions were recorded in Mumbai on May 30, 2021.
For context, April saw more than double that number at Rs 16,250 crore. However, January, February and March saw significantly higher residential sales: Rs 12,890 crore, Rs 12,989 crore and Rs 28, 961 crore, respectively.
There has been only one difference between the last three months of FY 21 and the first two of FY 22: a differential stamp duty of 2 percent in FY 21 and 5 percent in FY 22. Developers have now called for a reversion to FY 21 stamp duty rates.
“In the last couple of months, we have seen a steep downward trend in enquiries and sales, hampering not just the steady progress made by real estate, but also the 250-plus ancillary industries, which come into play due to the industry’s strong multiplier effect,” says Deepak Goradia, President, CREDAI (MCHI).
“It is imperative that the state government realizes the need for a stamp duty rebate to enhance homebuyer sentiment and also increase its own revenue collections, which have taken a massive hit, in May,” Goradia added. CREDAI’s point comes in the light of reduced stamp duty collections in Maharashtra, this fiscal.
While May accounted for only Rs 250 crore in stamp duty, April saw a relatively higher number of Rs 492 crore. Both months were subject to a stamp duty of 5 percent. However, March saw collections soaring at about Rs 830 crore even amid reduced stamp duty of 2 percent. January and February 2021 also saw good collections of Rs 298 crore and Rs 348 crore, respectively.
What’s more worrying is that of 5,360 units registered in May 2021, only 29 percent account for new residential sales executed in the month. According to Knight Frank data, a vast majority of May’s already tepid stamp duty collections may actually come from properties sold between December 2020 and April 2021. This statistic alone has amplified calls for the reintroduction of Maharashtra’s stamp duty rebate.
“To ensure that demand across categories is further encouraged, the government should consider providing demand stimulants at the appropriate time,” says Shishir Baijal, Chairman and Managing Director, Knight Frank India.
There’s no guarantee, however, that reintroduction of a stamp duty rebate will automatically lead to better real estate sales. After all, the impact of the COVID second wave has been pronounced and the subsequent lockdown and economic crisis that followed could have tightened purse strings. However, given the need for stimulus, another rebate, real estate observers feel, is worth a shot.

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