The demonetisation effect that has brought down revenue collection in the State has set alarm bells ringing.
The collection from the Department of Stamps and Registration during November-December (till date) has fallen short by nearly 27 per cent, and this is the worst performance for the department during the same period in the last five years.
While real estate has taken a hit, the Commercial Taxes Department — which will get a final data on tax collection during November only in January — is also estimating a loss of about 8 per cent, sources in the department said.
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Expecting a large hole in revenue collection for the fiscal following demonetisation, Chief Minister Siddaramaiah, who also holds the finance portfolio, has convened a review meet of all four major revenue streams — Commercial Tax, Excise, Transport, and Stamps and Registration on Wednesday.
Senior officials in the Department of Stamps and Registration told The Hindu that with the cash crunch likely to persist, they expect the trend to continue till the end of the financial year, leading to deficits in targeted revenue of Rs. 9,100 crore this fiscal. “If cash crunch persists till the end of the fiscal, the market will be down for two quarters that is half-a-year,” a senior official explained.
In fact, November-December period was a bad patch for revenue collection even during 2015 when the new revised guidance value that saw a hike in the range of 10 to 200 per cent came into force, leading to a crash in the number of transactions.
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Among the two months, December has performed a tad worse, which officials attribute to completion of property deals that were mid-way when the demonetisation was announced on November 8. “In November, sellers were even accepting payments in old currency in part. However, by December, no transaction involved old currency and even lesser number of property deals were struck,” a Sub-Registrar in Bengaluru said.
Bengaluru performs better in State
Bengaluru, which constitutes nearly 65 per cent of the realty market in the State, has performed slightly better compared to other parts during the past two months, as the revenue shortfall against the targets set is around 22 per cent.
“In the apartment sector, most of the corporates have shifted to transactions completely in white for some years now. Moreover, payments for flats are usually staggered over a time-table during development of the project, which was not much affected during the last two months,” said Suresh Hari of CREDAI, Bengaluru.
Guidance value revision postponed
In the light of the slump in realty transactions post-demonetisation, the Department of Stamps and Registration that was scheduled to revise guidance value rates in November has put off the exercise indefinitely.
“Already, there is a slump in the market. Last year’s data shows that post revision, it took more than three months for the market to settle down. In the immediate transactions fell by nearly 30 per cent. Revision of guidance value during a slump will only add to it. We have decided to take a call on the revision only in the next fiscal,” said a senior official.