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  • Writer's pictureNupur Mishra

Purchasing property in Mumbai to be an expensive endeavor soon



Purchasing real estate in Mumbai is likely to get costlier from April onwards. The Maharashtra government's exemption from stamp duty hikes may conclude in March 2022; duties can rise by 1%.


For a movable or immovable asset purchase, the buyer must pay stamp duty and registration costs to the state government. A stamp duty - a stamp tax or documentary stamp tax - is a government's tax on documents required to record types of transactions legally.


The stamp duty in Maharashtra varies between 3% and 6%, depending on several criteria like age and gender of the purchaser, age, location, and type of the property. In contrast, the property registration expenses in Maharashtra are 1% of the entire cost for buildings valued under ₹30 lakhs and limited at ₹30,000 for homes priced beyond ₹30 lakhs.


Purchasing a property in Mumbai is expected to become more expensive from April 2022. The Maharashtra government may raise stamp duty on house registration by 1%, determined using ready reckoner rates and the property value specified in the buyer-seller agreement.

 

Present Stamp Duty and Registration Charges in Mumbai, Maharashtra


City

Stamp Duty Rates (Male)

Stamp Duty Rates (Female)

Registration Charges

Mumbai

5%

4%

For properties below Rs 30 lakh - 1% of the property value.

 

For properties below Rs 30 lakh - 1% of the property value.

Thane

6% (Stamp duty 5% + Local Body Tax (LBT) 1%)

5% (Stamp duty 4% + Local Body Tax (LBT) 1%)

For properties above Rs 30 lakh - Rs 30,000.

Navi Mumbai

6% (Stamp duty 5% + Local Body Tax (LBT) 1%)

5% (Stamp duty 4% + Local Body Tax (LBT) 1%)

For properties above Rs 30 lakh - Rs 30,000.


Furthermore, stamp duty on gifting a house or property to a close relative may perhaps skyrocket from merely ₹200 to ₹1 lakh (based on a property value of ₹1 crore). The base price of ₹200 stamp duty might increase to 1% of the property value.

 

Is Commutation and Intercity Connectivity the reason?


With effect from February 8, 2019, the Maharashtra government had issued a notification imposing an additional stamp duty in the form of a surcharge on instruments of sale, gifts, and freehold or leasehold mortgages of immovable property located within the municipal corporation area where urban transportation projects are being undertaken. As a result, the stamp duty rate in Mumbai hiked from 5% to 6% on a transfer of immovable property.


Exemptions Granted

However, in March 2020, the government provided a two-year exemption for properties registered in the Mumbai Metropolitan Region. The waiver is now set to expire on March 31, 2022. Aside from a sale transaction, the effect on a transaction that involves the gift of immovable property will also be substantial.


The Budget Impact

The Maharashtra government stated in its budget 2021-22 that stamp duty and registration costs for females would be reduced by 1% above the standard stamp duty on property transactions if the transfer of residential property or registration of sale deed is done in the name of women (sole applicant).


The stamp tax on a gift of a residential apartment to a spouse, wife, son, daughter, grandson, granddaughter, or wife of a deceased son is now only ₹200. However, starting in April 2022, the identical transaction will be subject to a 1% ad valorem stamp tax, based on the flat's market value.

 

"The hike in stamp duty is enormous, making Maharashtra one of the most expensive states for house purchasers." According to Suhail Ahmed Khlji, a property lawyer in Mumbai, "this would also impact developers because most of them sold properties pledging to pay the stamp duty on behalf of the customers through programs."


 

Stay tuned to know more about the domestic real estate market news. You can also get in touch with our Real Estate Market Analysts for a consultation.

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