Expected steeper stamp duty slash
Real estate developers have welcomed the 1% reduction in stamp duty on property valued up to Rs 1crore that was announced at the state budget on Wednesday. But they feel finance minister Amit Mitra could have provided more relief to home buyers as the latter has to fork out more in GST regime.
Credai-Bengal, an umbrella organisation of builders from the state, had in its pre-budget presentation to the finance minister urged the state to reduce the stamp duty in Kolkata and other urban areas from 7% to 5%. Mitra on Wednesday did concede to the demand but only partially, reducing the stamp duty to 6%.
Credai-National vice-president Sushil Mohta welcomed the move but admitted he had hoped for a wee bit more. “We had expected the state to do a little more for home buyers. After all, the state exchequer will bag half the GST of 12% levied on the sector,” he reasoned.
For a home that costs Rs 50 lakh, a buyer had to earlier pay Rs 3.5 lakh in stamp duty. Henceforth, the payout will be Rs 3 lakh, a saving of Rs 50,000. For homes that cost Rs 1 crore, the payout will be down from Rs 7 lakh to Rs 6 lakh, a saving of Rs 1lakh.
However, when compared to the pre-GST regime, the buyer ends up paying more even if 4%-5% benefit by way of input credit is factored in. Prior to GST rollout, a home buyer had to pay 4.5% service tax, 7% stamp duty and 1.1% registration fee. Hence, the total incidence of tax and charges was 12.6%.
Following GST rollout, home buyers had to pay 12% GST, 7% stamp duty and 1.1% registration fee that added up to 20.1%. Now, with Mitra announcing 1% reduction in stamp duty, the payout will be 19.1%.