Boost for realty! Maharashtra slashes premium for construction by 50%

In order to boost the real estate sector, Maharashtra government has slashed premiums charged on construction by 50 per cent till December 31, 2021. The 50 per cent waiver in premium will apply to both ongoing and new projects.

The developers, who take benefit of the 50 per cent waiver in premium in construction projects for the next one year will have to pay the entire stamp duty amount on behalf of customers.

The Maharashtra cabinet informed that the decision is based on the report submitted by Deepak Parekh committee set up to suggest measures to boost the state's construction sector post-COVID-19 lockdown.

According to the Deepak Parekh committee, as many as 22 types of premiums are collected in Mumbai under various heads such as staircases, lift well, lobbies, etc. These premiums are higher than in cities like Bengaluru or Delhi. In Bengaluru, the developers have to pay 10 different premiums and charges, whereas, in Delhi, it is five and in Hyderabad, it is three.

To avoid windfall to any specific company or project, the waiver of premium will be allowed at the circle rate existing as of April 1, 2020, or the current circle rate, whichever is high, the state government said.

However, the Leader of Opposition in the assembly Devendra Fadnavis of the BJP criticised the government's decision and said it will not benefit property buyers.

"I had asked the state government to involve RERA (housing sector regulator) in the process of registration and stamp duty collection to ensure property buyers get the benefits of such a decision. However, the government has done exactly the opposite," Fadnavis said.

"There was a need to give some relaxation to people but this half-hearted decision will not benefit property buyers for sure," the BJP leader said.

Meanwhile, Mumbai Congress president Bhai Jagtap demanded that the property tax for houses measuring up to 500 sq ft in the metropolis be waived totally and alleged the previous BJP government had failed to do the needful in this regard.

Jagtap demanded that houses measuring from 501 sq ft to 700 sq ft be given a 60 per cent waiver in the property tax, and slum-dwellers in Mumbai be provided water for free without any levy.

According to the Knight Frank report, housing sales in Mumbai, the most expensive real estate market in India, saw 20 per cent decline at 48,688 units in 2020 from 60,943 units during 2019.

However, the Maharashtra government's decision to temporarily cut stamp duty on registration of properties led to higher sales in Mumbai and Pune region during the last four months of the 2020 calendar year. The state government had in September lowered stamp duty to two per cent from five per cent till December 31, 2020.

Also read: US Capitol violence: Twitter, Facebook, Instagram suspend Trump's accounts

Also read: 'Distressed' to see rioting in US Capitol, says PM Modi