Stamp duty cut wins wide applause

Property developers in Kozhikode city are happy about the proposals in the State Budget presented by Finance Minister T.M. Thomas Isaac in the Assembly last week.

One of the major proposals is to reduce the stamp duty and abolish the surcharge on stamp duty. “It is generally felt that stamp duty prevailing in Kerala is on the higher side,” Dr. Isaac said in his speech.

Repeatedly, builders have been demanding a cut in the stamp duty, which was the highest in the country. Now the proposal is to bring the effective rate of stamp duty, surcharge and registration fee in Corporation areas to 11 per cent; in municipality, township and cantonment areas to 10 per cent; and in grama panchayat areas to 9 per cent.

The existing stamp duty in Corporation areas is 13.5 per cent; municipalities, 12.5 per cent; and in the grama panchayat limits, 10 per cent. This apart, a 2 per cent charge is levied for registration.

Builders are also elated over the prospect of bringing down the stamp duty charge on flats and apartments to five per cent. “Surely, this is a radical proposal that will benefit the end-user. Moreover the budgetary proposal will give an impetus to the construction industry,” says Nityanand Kamath, Chairman, Confederation of Real Estate Developers Associations of India (CREDAI), Kozhikode chapter.

Clients who booked apartments and flats in Kozhikode have not registered the units because of the high stamp duty rates prevailing in the State. Many had kept in abeyance the registration even after occupying the flats. The proposal will make them register their property and bring revenue to the State exchequer, he says.

Reduction in stamp duty has been provided for environment-friendly housing projects. Apartment complexes having facilities for harvesting rainwater, energy- saving electrical appliances and solar panels for lighting and water heating will need to pay four per cent stamp duty. A chartered engineer should certify such projects. This concessional rate shall apply only if the transfer takes place within six months from the date of allotment of house number by the civic bodies.

Dr. Isaac said, “I feel that the construction industry, which is being badly affected by recession, needs a helping hand from the government.”

However, realty experts feel that the stamp duty needs to be reduced further in the range of 7-8 per cent to make the rates uniform with other States. Eventually, future governments will be compelled to buy this argument in the wake of the implementation of the fair value of land in the State, Mr. Kamath says.

The budget has already made a proposal that the fair value of land fixed on the basis of 15 categories will come into effect on April 1, 2010. “It was insisted that the fair value of land should not exceed 50 per cent of the market value. There may be some practical difficulties in implementing fair value. In order to resolve such difficulties, District Collectors will examine and redress such anomalies relating to valuation,” Dr. Isaac said.