Duty cut fails to enthuse real estate developers

AHMEDABAD: State finance minister Vajubhai Vala''s move to reduce stamp duty on immovable property by 2.8 per cent from 11.2 per cent to 8.4 per cent failed to enthuse the real estate fraternity, which nevertheless welcomed the sales tax on cement, tiles (wall and floor) and sanitaryware from 15 per cent to 8 per cent as it would reduce construction costs.
Unhappy with the fact that the state government reneged on its promise to drastically cut stamp duty, Arun Chaturvedi, president, Federation of Real Estate Developers Association of Gujarat (FREDAG) said: “We were promised by the finance minister himself that stamp duty would be brought down to 3 per cent. The 2.8 per cent reduction will not have much of an impact in bringing about transparency in the sector,�
“Properties worth crores has remained untransferred because of which the end user is suffering as they cannot secure the property in their name because of high stamp duty burden,� Chaturvedi pointed out.
Jakshay Shah, vice-president, Gujarat Institute of Housing and Estate Developers too expressed his displeasure with the extent of stamp duty saying it was not up to expectation as verbally the government had committed a 3-4 per cent duty.
According to Vijay Shah, civil architect and builder, the stamp duty should have been brought down to around 4 per cent as the BJP''s National Housing Policy has prescribed that as the ideal rate for stamp duty across the country.
However, viewing the stamp duty reduction as a first step in the right direction, Harshad Patel, president, Gujarat Institute of Housing and Estate Developers, felt that the gap between Gujarat and other states in this respect had been reduced.
“The high stamp duty was affecting the state exchequer as people were avoiding it. With a reduction there will be a move towards compliance,� he hoped.
Arvind Shah, president (marketing), Agrawal Constructions, pointed out that the sales tax reduction on key inputs would definitely boost the construction industry as lately cement rates had been at high levels.
“This will definitely provide a relief to not only builders but also to the end user as
cost of construction will be reduced,� Shah explained.
According to tax expert Mukesh Patel, the stamp duty reduction indicated an effort to make property transactions cheaper, particularly for women with the 1.5 per cent registration fee exemption.
“Interpreting the move in the right spirit even in the case of a property purchased in co-ownership, the exemption in regard to registration fee should be proportionately available to the extend of the share of the woman in the property,� he opined.