In the 2017-18 budget, the West Bengal government has slashed the stamp levy to 2% from the prevailing 6-7% and the registration fee to 1% from 1.1%. In order to avail the benefit of the stamp duty cut, the registration has to be done within a period of four years from the date of agreement and payment of the balance stamp duty. The focal point of the budget remained the realty sector which is facing an ongoing slump. It also offered an additional 20% early bird discount in the registration fees, if the property is registered within a year of completion. . These proposals will come into effect once the finance bill is passed in the assembly in the last week of February 2017.
“Kolkata market which is majorly an end-user driven market has been going through a slump for the past two years. It is felt that although reduction in the stamp duty was a long standing demand of the sector, it is not enough to drive sales. In the past, developers like Lord Realty and Eden Group offered to bear the cost of registration and stamp duty in their respective projects to increase the sale velocity. However, such offers were not enough to lure buyers. Therefore, this move of reduction in the stamp duty will only have a marginal impact on the sale of properties” says Saikat De, General Manager, Valuations and Advisory, Colliers International.
The reduction in the fees is expected to increase compliance and urge more buyers to register for agreements of sale but the move will result only in marginal improvement in the sales velocity. The high stamp duty charges precluded consumers from registering for the agreement of sale. In addition, consumers refrained from registering the agreement of sale especially for a property which was not complete and they feared that the developer might fail to deliver the project entailing a significant loss to the buyer.
The reduction in the stamp duty comes as a huge respite to the home buyers as the cost of paying the stamp duty is borne by the consumer along with the down payment and is not funded by the home loan companies. All these measures will boost activity in the sector thereby benefitting the real estate sector in the long run.