Strong legal action will be initiated against housing developers in Maharashtra who do not pass on the full benefit of ‘stamp duty exemption’ to the homebuyers under a scheme of the State government, the Maharashtra State Housing Minister Jitendra Awhad told BusinessLine.
Highly placed sources in the State Urban Development Department revealed that it had come to their notice that few Mumbai developers were duping homebuyers by making them pay the stamp duty even after availing the discount scheme. The Maharashtra government has collected a record amount of nearly ₹15,000 crore from housing developers, mainly from Mumbai city, by giving them a 50 per cent discount on the construction cost and various permission on conditions that they bear the ‘full cost of stamp duty’ on behalf of the homebuyers.
The scheme ended in December 2021 but has been extended to January 2022 and further decision on extension is likely since additional files worth nearly ₹5,000 crore are pending approval, the sources said. A 5 per cent stamp duty is levied on house purchase in Maharashtra.
But to revive the housing sector and kick-start stalled projects, the State government announced a scheme through which under-construction and new projects were given a heavy discount on construction cost and related permissions involving IOD (Intimation of Disapproval or Authorisation) and CC (completion or commencement certificate).
To compensate retail and middle-class home purchasers, the government asked the builders to furnish an undertaking that mandated the developers to bear the stamp-duty.
However, lawyers say most retail home buyers have no idea of such a scheme making it convenient for the builders to defy the undertaking they gave to the government.
It could turn out to be a scam worth hundreds of crores since home buyers are not educated enough of the legal recourse.
Also some builders are raising their cost via other means to balance the stamp duty refunds even after finalising the deal, which amounts to a fraud, lawyers say.
“It is imperative that the Maharashtra government comes out with some mechanism to ensure that the stamp duty benefits are passed on by the developers to the home buyers. Mostly the home buyers are unaware of the benefits that the government has extended to them and the developers may not pass it on to them. There has to be some mechanism where the home buyers are informed of the benefit and they can lodge a complaint if the developers have duped them. The government may consider some mechanism similar to that of the anti-profiteering committee under the Goods and Services Tax Act 2017, to enable home buyers to file complaints,” said Suhail Ahmed Khilji, a property lawyer in Mumbai.
“We are yet to decide on further of the scheme. It has been a great success in starting stalled projects. But the homebuyers who have been made to pay stamp-duty even if their builder has availed the scheme can complain to the state urban department and my ministry,” Awhad said.
A government resolution issued by the Urban Development Department required the builders to pay premiums based on the ready reckoner (RR) rates of 2019 or 2020, whichever was higher.
The one condition for the developers who opted for the scheme was that they had to give an undertaking to the local bodies that they will pay the ‘entire stamp duty’ and not charge any of it from the homebuyers.
Nearly all the developers in Mumbai with ongoing or upcoming projects have opted for the scheme.