The West Bengal government’s move to extend the rebate on stamp duty and circle rate by another six months till September 30, 2023, is likely to bring buoyancy in the real estate market in the State apart from shoring up state government’s revenue collections.
Presenting the Bengal Budget 2023-24, Chandrima Bhattacharya, West Bengal minister of state for finance (independent charge), had said that the 2 per cent reduction in stamp duty and 10 per cent rebate on circle rate on land and property which was valid till March 31, 2023, has been further extended by six months up to September 30, 2023.
The state government had announced reduction due to pandemic when the housing sector had witnessed a huge setback. As a result of the reduction, the number of registrations, particularly by small flat holders has reached 34,44,070 between July 2021 and December 2022.
“This has brought significant revenues to the government, besides stimulating the entire real estate sector,” she said in her speech.
The two per cent reduction culminates into a reduction in the stamp duty payable on the agreement value. Say, if the agreement value is ₹50 lakhs, stamp duty will come down by ₹1 lakh. In addition, the registration fees of one per cent will also get affected and will come down accordingly, industry insiders said.
According to Abhijit Das, Senior Director – East, Knight Frank India, since the initial announcement of stamp duty cut in July 2021, over 76,000 residential properties were registered in the city between July 2021 – December 2022. The 18 months prior to the introduction of stamp duty rebate saw registrations of mere 47,317 units.
“It is therefore important to note that there is a 61 per cent upswing in the period of stamp duty rebate (July 2021 – December 2022) versus the preceding period (January 2020 – June 2021). The data pertains to transactions in both primary (fresh sale) and secondary (re-sale) markets for all residential apartments for all periods,” Das told BusinessLine.
The reduction in stamp duty logically advances buying decisions for completed and onging projects.
“The reduction in stamp duty also affects the decision making of a consumer planning to buy a completed or soon to be completed and re-sale apartment. This logically help sellers to sell faster and mostly the sale receipts gets invested into buying another property to take benefit of the capital gains. . When there is an increase in transaction volume, developers too benefit due to faster sales in their projects,” he explained.
Moreover, the state government gains additional revenue not only from the increase in current sales, but the larger chunk of revenue comes from registration of apartments which has been bought much earlier but not yet registered. Consumers take the rebate benefit and decide to register their non-registered properties thereby contributing higher revenue to the state, though at a discount to the actual potential of the revenue if there was no rebate. It is to be noted that the State’s own tax revenue comes primarily from GST, sales tax, stamp duty, excise, land revenue and motor vehicles tax.