Flat buyers may have to pay 1% extra stamp duty

Mumbai: Property buyers in the city have something more to worry about. The state government plans to hike stamp duty by 1% and take it to 6% from October 1. 

    The stamp duty is currently computed at 5% within city limits. The revenue generated from this hike will be passed on to the BMC to support the latter's transition from octroi to the local body tax (LBT). 
    The surcharge of 1% on the value of a flat (irrespective of whether it's a sale or a gift) may sound paltry but in Mumbai, where a 2BHK in the distant suburbs may cost over Rs 1 crore, this difference will leave a big hole in the buyer's pocket. 
    "If this hike is accepted by the government, a buyer will have to shell out a total 10% in various taxes like value-added tax, service tax on the value of property. This is in addition to the high property tax proposed by the civic body. People will find it very difficult to buy a home,'' said advocate Anil Harish. 
    Senior civic officials sought to play down the proposal by saying a final decision would be taken after it receives a report from Mumbai University's economics department on what should be the rate of taxation and other sources of revenue. "The government, as per rules, has allowed municipal corporations like Nagpur, Pune and Navi Mumbai to hike stamp duty to boost its revenue. We are also considering doing so, although corporators and developers have requested us to increase either entertainment or development charges instead of stamp duty,'' said a senior civic official. BMC hopes for 1,200cr payoff from surcharge 
Mumbai: The proposed hike in stamp duty is some six months away, but the BMC however, does not want the government to collect the surcharge on its behalf. "It takes a lot of time before the government releases funds meant for us. We have therefore written to them to allow us to collect the surcharge directly,'' said the official. 
    To get an estimate of the revenue the proposed levy would generate, the country's richest civic body has asked the stamp duty and registration department to give details of the number of documents registered and amount collected from each zone per month. 
    The government has in 2010, 2011 and 2012 collected almost 65% of tax from the registration of immovable properties. The income from stamp duty during 2008-09 was Rs 8,384 crore, which increased by 30% to Rs 10,901 crore in 2009-10, then to Rs 13,411 crore in 2010-11 (23% increase) and toRs 14,800 crore in 2011-12 (10%). 
    The BMC, which has estimated a surplus of Rs 15 crore from the 2013-14 budget, hopes to generate over Rs 1,200 crore from this proposed surcharge. It had collected property tax bills aggregating Rs 3,657.1 crore in 2012-13, following the transition of the property tax system from ratable value to capital value-based system.