Bengal's New Property Tax Proposal Sparks Controversy
The West Bengal state government's proposed property tax, introduced within the Finance Bill 2013, has drawn sharp criticism from the Confederation of Real Estate Developers’ Associations of India (CREDAI) Bengal chapter. The organization argues that the new tax will significantly increase the cost of property transactions, adversely impacting both the real estate sector and the frequency of transactions overall. The new tax policy in Bengal is projected to considerably affect existing property dealings.
CREDAI Bengal contends that the proposed tax will severely hamper property transactions within the state. They further emphasize the broader repercussions for the entire real estate industry.
A key point of contention lies in the property valuations underpinning the new tax. CREDAI Bengal and other stakeholders allege inaccuracies in the valuation process. They claim that the government authorities have assigned valuations far exceeding actual market prices. This discrepancy translates to inflated tax burdens for property owners, who may be forced to pay disproportionately high taxes. This discrepancy is also projected to escalate costs during any property transactions.
The situation unfolds against the backdrop of a newly implemented central government tax on property transactions and purchases. This separate system also bases taxes on assessed valuations. Though similar in principle, it bears critical differences from the proposed Bengal tax. Importantly, the central government's tax is tied to the property's sale price, including when the project is under construction. Notably, developers assert that the new property tax will adversely affect both developers and buyers.
"The developers in the state are highly affected by this. In most of the cases the valuation is far above the actual prices," said Harsh Vardhan Patodia, CREDAI Bengal chapter chief.
The organization further emphasizes that higher valuations will inevitably lead to inflated stamp duty expenses for buyers, thereby making property registration more expensive overall. Real estate developers worry about the potential stagnation of the market, fearing a drastic drop in transactions in the state. The collective impact of increased taxes, according to sector experts, will force developers into an even more precarious position. The anticipated decline in property transactions is expected to exacerbate difficulties in an already struggling real estate sector.