The Maharashtra Government on Tuesday issued a notification introducing an additional one per cent of stamp duty to be collected as surcharge on property transactions in Mumbai. The reasoning behind the move is Maharashtra Government needs funds to finance major infrastructure projects currently underway in the Mumbai city, especially the Metro. The extra duty will be charged on all property deals from February 8.
The stamp duty in Mumbai will now increase to six per cent of the property transaction amount, which means real estate / property will become even more costlier in Mumbai city. Maharashtra Government expects to generate more than Rs 1,000 crore in this way. This revenue will be collected by the Stamps and Registration Department and passed on to the Mumbai Metropolitan Region Development Authority (MMRDA), via the Urban Development Department.
The MMRDA used to earlier sell lands in Mumbai and generate funds. With this land bank drying up, Maharashtra Government Assembly cleared an amendment in the Mumbai Municipal Corporation Act that authorises the Brihanmumbai Municipal Corporation (BMC) to levy an additional one per cent on stamp duty as surcharge.
A senior officer of the Stamps and Registration Department said the notification was issued on Monday and is effective from February 8. Hence, a recovery will be done for all documents registered on February 8.
The Maharashtra Government is currently facing a financial crunch. It has begun work on expensive projects in Mumbai, such as nine Metro routes, and the Versova-Bandra Sea Link (VBSL), which will cost more than Rs 1lakh crore. Moreover, recently, the MMRDA told the Mumbai Port Trust to share the cost of the Metro 4A, as it would service the area to be developed by the port trust.
Our views is that it will be now difficult to recover the additional stamp duty for all documents presented on February 8, and there will be legal disputes. The department should have released the circular and given a later date for implementation. This would have also helped many real estate / property buyers. This increase in stamp duty will further impact property sales in Mumbai.