In a move to bolster the real estate sector and the construction industry, the Maha Vikas Aghadi (MVA) government has prolonged the stamp duty exemption period for investors who sell their property within a year of purchase.
The corresponding bill received approval from the state legislature on Wednesday. However, investors may now benefit from stamp duty exemptions even if they resell their property within three years of its purchase. For such transactions, stamp duty is only paid on the difference in the property's price, not on the full amount.
It is worth noting that according to the RERA Act, which entered into force in the state on 1 May 2017, it generally takes at least three years to complete a project within the conditions and rules of the RERA Act.
In the current scenario, if an investor buys an apartment and wishes to resell it within a year, a certain exemption from stamp duty is provided by charging only the price difference. The bill, however, explains that the one-year period has not allowed for significant profits from such trades, especially given the pandemic situation. The number of resales yielding such profits is very minimal.
Encourages More Investments and Sale-Purchase Deals
The bill is founded on the need to spur business activity in light of the rapid global economic development and the post-pandemic context.
If the period of validity of the permit is extended to three years, this privilege will be utilized by a larger number of investors, as stated in the bill's purpose. This decision will not only enhance investment volume but also expedite the signing of sales contracts, ultimately benefiting the state's large revenue from stamp duty.
Revenue Minister Balasaheb Thorat stated, "Various reports from the real estate industry highlight the losses they have suffered, particularly in the post-COVID period. This decision will encourage investors to enter into real estate transactions and, in turn, help the government generate revenue and create jobs."
Builders Can Misuse This Service
Experts from the cooperative sector and stamp duty sector also shared their opinions, stating, "This could be a step towards pleasing builders and their investors. It is very possible that builders are financing politicians. We all know that the election is just around the corner. Hence there is a possibility that funds will be given to political parties."
Vinod Sampat, President of the Registration Fee & Stamp Duty Payers Association, added, "Builders also have the opportunity to abuse this service by selling apartments to their employees/assistants, as well as taking out home loans and using these funds for personal needs. Therefore, they can receive funds at a very low price. We all know that housing mortgage rates are much lower."
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