The effects of the coronavirus pandemic are being felt across various business sectors in India and the real estate sector has not been spared either. This unprecedented COVID-19 crisis has brought the Indian real estate sector to halt and significantly eroded the market of its potential buyer-base. In an effort to boost the real estate market in Maharashtra, the state government has temporarily reduced the stamp duty.
So, what does it mean for the home buyers and how can you benefit from the stamp duty reduction in Maharashtra? Here’s everything you need to know about Stamp duty reduction in Maharashtra.
Contents
What is stamp duty?
Stamp duty is a type of tax and its basic purpose is to raise revenue for the government. The stamp duty varies from state to state. Whenever any movable or immovable asset changes hands, the buyer of the property has to pay a certain amount of tax to the state government to get it stamped. This is called stamp duty. The Maharashtra stamp act specifies such assets and instruments on which the stamp duty has to be paid to the state government.
How is stamp duty calculated in Maharashtra?
The stamp duty varies across the region in Maharashtra, depending upon the property location and type of deed. The stamp duty is usually charged on the transaction value or circle rate (Circle rate is the government-determined price for a property below which it cannot be registered in the government records) whichever is higher.
For instance, if the value of the property is INR 1 crore, and the stamp duty is 3%, the buyer has to pay an amount of INR 3 lakhs as tax. Additionally, 1% of the property value up to a maximum of INR 30,000 must be paid as registration charges. However, if the property is a residential or agricultural property that is gifted without any payment to family members, the stamp duty is INR 200. One thing you have to note here is that stamp duty is not a one-time fee, every time the property is bought by a new owner, he/she must pay the stamp duty.
Stamp duty reduction in Maharashtra:
In order to ease pressure on the struggling real estate sector in Maharashtra, the government of Maharashtra on August 26, 2020, announced that there will be a reduction on stamp duty on properties in areas falling under the Mumbai Metropolitan Region Development Authority (MMRDA) and municipal corporations of Pune, Pimpri-Chinchwad, and Nagpur. The stamp duty reduction in Maharashtra are as follows,
- For Mumbai, the stamp duty rate applicable till August 31 was 5%. The stamp duty rates applicable from September 1, 2020, till December 31, 2020, is 2%, and from January 1, 2021, till March 31, 2020, it’s 3%.
- For Pune, Thane, Navi Mumbai, Pimpri-Chinchwad, and Nagpur, the stamp duty rate applicable till August 31 was 6%. The stamp duty rates applicable from September 1, 2020, till December 31, 2020, is 3%, and from January 1, 2021, till March 31, 2020, it’s 4%.
What does stamp duty reduction in Maharashtra mean for homebuyers?
Stamp duty reduction in Maharashtra is not just a massive stimulus for the state’s weakened real estate sector but also for the homebuyers who were waiting for the right time to buy a home. The stamp duty and registration charges significantly increase the total cost of the purchase and often has a negative impact on the decision of the buyers. Especially in cities like Mumbai and Pune in Maharashtra where the cost of properties is already high, stamp duty and registration charges add a further financial burden on the buyers.
But, now, with the stamp duty reduction in Maharashtra, along with the low interest on home loans and credit-linked subsidies offered by the central government under the PMAY scheme, buyers can save a lot of money in the process. For example, if a buyer wants to register a property worth INR 1 crore in Pune today, he has to only pay 3% i.e INR 3 lakhs as stamp duty, whereas earlier (before September 1, 2020) he would’ve paid 6% i.e INR 6 lakhs as stamp duty. Thus, the stamp duty reduction in Maharashtra will result in substantial savings for the buyer. This will further encourage fresh buyers, especially millennials to come forward to invest in a property.
How to Pay Stamp duty online in Maharashtra?
According to the Maharashtra Stamp Act, buyers can pay the stamp duty online while registering property in their name. Follow these steps to pay your stamp duty online.
Step 1:
Visit the Maharashtra stamp duty online portal: https://gras.mahakosh.gov.in/igr/frmIndex.php
Step 2:
On the landing page, fill in your username and password and click ‘Login’. If you are a new user click ‘Pay Without Registration’ and on the next page choose ‘Citizen’.
Step 3:
Select the type of transaction you want to do and choose ‘Make Payment to register your Document’.
Step 4:
You can now opt for paying stamp duty and registration fee together or separately.
Step 5:
Fill the required details such as property value details, payment details, and party details.
Step 6:
Choose a payment option and pay the required amount. After a successful transaction, generate the challan which has to be presented at the time of execution of the deed.
Thus, the stamp duty reduction on property registration in Maharashtra is all set to revive the real estate sector that has been heavily hit by the COVID-19 pandemic. This is also expected to bring a new wave of home buying in the short run. This is a win-win situation for everyone in this crisis as the state government gets revenue in the form of taxes, homebuyers save a considerable amount on stamp duty and the real estate sector gets a boost.
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