Yes! You read that right. The Maharashtra state assembly on 23rd March passed a bill that is set to give a major boost to the real estate investment sector along with providing a huge sigh of relief to real estate investors.
The bill enables an extension of the stamp duty payment period from one year to three years for the resale of every new property. This is opposed to the previous scenario where real estate investors had to pay a stamp duty between 4% to 7% of the property value on the purchase of plots.
With the new bill in place, investors can save a considerably good amount on property purchases. For example, if an investor purchases property of Rs. 1 crore in Powai, initially he would have to pay 5% as stamp duty charges that would amount to Rs. 5 lakh on the property purchase as the stamp duty.
Upon the implementation of the new bill, investors can pay the stamp duty on the same property after a period of 3 years and the duty would be payable on the rate difference of the property instead of the complete amount at the end of 3 years!
This means that if the Powai property which you invested in 2022 gets priced at 1.5 Crores after 3 years, then your stamp duty would be applicable on the difference of 1.5 Crores and 1 crore that is on an amount of 50 lakhs. Thereby, you would have to pay only 5% of 50 lakhs i.e. 2.5 Lakhs instead of 5 lakhs as stamp duty as against the case with the previous condition.
So think about the money you would save as an investor in the time of 3 years!
If you consider a yearly rate of interest on Fixed Deposits as 5.25%, and you invest a sum of Rs. 5 lakhs (an amount that you would have otherwise paid as the stamp duty on your 1 crore Powai property purchase) as an FD in a national bank like the State Bank of India for a period of 3 years, you would be saving Rs. 78,750 by the end of 3 years!
What prompted this decision?
As the world resumes the quintessential normal life in the post-pandemic era, it has become important for the State government to boost and encourage investments, businesses, real estate deals to enable the generation of more revenue and employment in the State and this bill is going to ensure that.
Extending the resale time for stamp duty concession from one year to three years will benefit investors not only in terms of property appreciation but also in terms of income tax savings, as properties sold after two years for the purpose of purchasing a larger one within a year are guaranteed to receive Income Tax exemption.
“In the wake of the pandemic, the investors need to be given some relief. If the current one-year duration is extended to three years, then not just the real estate sector will get a boost but there will also be a rise in the sale of the houses which will lead to increasing the government’s revenue,” - Revenue Minister Balasaheb Thorat.
The Maharashtra Stamp Act came in 1958 applies to all documents in Schedule 1 for which state collecRead More