Stamp duty set to go through roof

Stamp duty set to go through roof
Deccan HErald
With the maximum upward revision close to 350 per cent, stamp duty and registration fee is set for a markedly upward swing.

The first impact on the city’s real estate sector following the upward property guidance value revisions in Bangalore Urban District, will come in the form of increased stamp duty.

In Bangalore, the combined component of stamp duty and registration fee on properties is around 9.5 per cent of the value of the property. With the maximum upward revision close to 350 per cent, the component is set for a markedly upward swing. However, the realty industry is not quite charged up about the move.

“With the new guidance values, the entire property tax component will now be 40 per cent of the total value, around eight per cent more than the existing figure. The hike, along with the revised stamp duty, will ultimately hit the buyer,” Balakrishna Hegde, President, Karnataka Ownership Apartments Promoters Association (KOAPA), told Deccan Herald.

Other real estate industry sources put the average rise in stamp duty in major areas as anywhere between 75 and 100 per cent.

According to officials in the Stamps and Registration Department, with the hike in guidance values in place, the stamp duty — 8.4 per cent of the value of the property — could considerably enrich the department coffers.

On a 2,000 sq ft apartment (at an existing price of Rs 1,500 per sq ft) in an area that has seen an upward guidance value revision of 50 per cent, the buyer will now have to cough up more than Rs 3.75 lakh as stamp duty, an increase of more than Rs 1.25 lakh. “The actual impact will be on the buyer, who will now start feeling the heat even more,” said a realty agent.

The upward revision of guidance values could also prove to be in direct contrast to the State Government initiative to reduce the stamp duty on registration in a phased manner. Finance Minister B S Yediyurappa had in the 2006-07 budget brought the stamp duty down by 0.5 per cent and followed it up with another 0.5 per cent cut on properties with title insurance, in the 2007-08 budget. However, the upward value revision would in effect contradict the efforts to bring down stamp duty, felt sources.

The new guidance values may have unleashed new statistics pointing at a realty boom.

However, realtors and experts are skeptical, saying the revision could hit the industry in the coming years and, more importantly, douse middle-class buyers’ ambitions to own property.



AREA APARTMENTS (per sq ft)

Malleswaram-

Navarang Main Road * Rs 3,190

Patalamma Road Rs 3,850

Raj Bhavan Road Rs 6,930



APARTMENTS IN BDA / BMRDA EXTENSIONS

East Belmount

(Banashankari) Rs 2,700

Pattanagere

(Rajarajeshwarinagar) Rs 1,540

Kengeri Satellite Town

BDA Road Rs 1,760

With the new guidance values in place, (as given above) the stamp duty and registration fee for a 2000-sq ft apartment on Malleswaram-Navrang Main Road will be in the excess of Rs 6 lakh. For a 1,600-sq ft apartment in Jayanagar 9th Main III Block (Rs 5,060 per sq ft), the stamp duty and registration fee will be more than Rs 7.5 lakh. (* with marble/ granite tiles)