Reduction in Stamp Duty Rates is a Boon for Homebuyers
July 7th, 2020
Homebuying is a multi-fold process, starting from deciding to buy a home, to choosing and finalizing the layout, registering the property and finally moving in. While the Covid-19 induced lockdown may have hindered this process temporarily, the state governments across the country in coordination with the central government and the Reserve Bank of India (RBI) have taken several steps to allow homebuyers and property developers to resume the process with ease.
Having taken into consideration the various expenditures incurred while buying a home, the government has not only reduced interest rates on loans but has also reduced the Stamp Duty rates. Stamp Duty is essentially a tax paid to the state government on property transactions. This tax can vary based on gender and the state where it is being registered. It is not uniform across the state and it varies for different documents.
This tax has been reduced from 5% to 2% for properties worth up to Rs. 20 Lakhs and from 5% to 3% for properties worth up to 35 lakhs, in Karnataka. The Maharashtra state government has reduced the stamp duty rate from 6% to 5%, for the next two years, thereby making homebuying significantly more affordable. Adding to this, the government has also made sure that the tax can be paid online from the new fiscal year. These measures have been taken by governments across the country to increase the demand and purchase of homes in the affordable real estate segment.
The implication of stamp duty reduction has a major advantage of offering tax benefits to the homebuyer. Additionally, if the home is bought jointly with any one or more members of the family, all buyers are entitled to claim the stamp fee in proportion, according to their property share. It is also considered well by banks in the eligibility criteria for securing loans. Hence, the reduction of Stamp Duty rates implies the easier affordability of homes. It also means that loans will be simpler to obtain, and tax benefits are more likely for most of the country.
This will help increase the number of homebuyers across the country over the next two years. This the most ideal time for an individual to invest in residential property.