Kerala Finance Minister KM Mani’s proposal in the State Budget to standardise stamp duty for property registration is likely to reduce revenue, say senior Registration Department officials.
Mani proposed that the stamp duty be fixed at 6 per cent of the sale value across the State. This way, the stamp duty percentage will be the same in the panchayats, municipal towns and city corporation limits. As of now, the stamp duty is 7 per cent in city corporation limits, 6 in municipal areas and 5 in panchayats. From April 1, the rate will be a uniform 6 per cent – the rate in the panchayats will go up by one per cent while it will come down by one per cent in the cities.
The standardisation of stamp duty rates is said to be on a suggestion by the Centre and the Finance Commission.
A senior official pointed out that each property transaction in the urban areas runs into crores of rupees and hence the duty was also proportionately high. But in the case of panchayats, the amount was relatively small. Another official noted that in the urban areas, purchase of apartments is very high, while in the panchayats it is negligible.
Stamp duty rates have never been uniform in Kerala. Until recently, they used to be 7 in the panchayats, 8 in the municipal towns and 9 in the cities. Before that, the rates were 10, 12.5 and 13.5.
The Finance Minister has also proposed to change the rules regarding fair value so that the value could be increased to help the government get more revenue. The fair value, the minimum price of a property at which the transaction can be registered, is likely to be increased by 10 per cent. Officials said there was a provision in the fair value rules to increase the rates every five years, but the process was cumbersome.
Mani has also doubled the building tax beyond a certain plinth area limit, while scrapping tax on very small houses.