The resale housing market will get a boost after the Bombay High Court said stamp duty cannot be collected retrospectively on resale of old properties whose sale agreements are insufficiently stamped or not registered.

“The resale market is already doing better than under-construction homes due to zero execution risk and no GST. The ruling will bring down transaction cost of old properties and the seller may decide to pass on the benefit of lower costs to buyers,” Liases Foras MD Pankaj Kapoor told BusinessLine .

Niranjan Hiranandani, National President, NAREDCO said the judgment offers major relief to prospective sellers and buyers of old properties in Mumbai. “From a home buyer’s perspective, stamp duty is an additional payment while buying a home. And in Mumbai, this duty has been recently revised upwards. So the judgment is welcome and it will be beneficial for buyers of resale homes,” he said.

Stamp duty in Mumbai is up 5 per cent, and paying it retrospectively if it wasn’t paid by the previous buyer, is an added burden for the buyer.

Farid Karachiwala, Partner at J Sagar Associates, said the order makes it clear that while registering a document for sale of a property, any other document annexed to it does not attract stamp duty. “Transactions done before 1985 did not require stamp duty and registration. The order will safeguard interest of buyers purchasing older properties,” he said.

Lack of clarity

Justice Gautam Patel, in the December 13 order, said stamp duty should not be calculated retrospectively for a property that was sold at a time when the law was different. “Regarding the question of stamp duty on antecedent documents, there is no clear or well-considered response from that office. Neither the officer present or Himanshu Takke, Assistant Government Pleader (AGP), is able to state under what provision of law old documents prior to the amendments to the Stamp Act could be legitimately or lawfully said to be ‘unstamped’ or even insufficiently stamped if, according to the law as it stood at that historical point in time, the document itself was not liable to stamp in the first place,” the order said.

Hiranandani said from home buyers’ perspective, there would be expectations of similar positives for the primary market too. “We hope the powers-that-be will also consider the situation of ‘first-buyers’, the primary segment of home-buying transactions and provide some relief so that the home-buyer sentiment moves even more into the ‘positive zone’, and we see the off-take of home buying increasing as we move into the new year,” he said.

 

 

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