Will stamp duty on affordable housing be revoked? Centre asks states to abolish it
Venkaiah Naidu said the ministry has also recommended that the real estate sector should be taxed at a rate 'which is revenue neutral and not at a higher tax rate'
In a bid to boost affordable housing, the central government has asked the state governments to waive off stamp duty for such projects and rationalise it for others, Minister for Urban Development, Housing and Urban Poverty Alleviation M Venkaiah Naidu said on Monday.
Stamp duty is a state subject, with the state governments deciding the rate. The rates vary with each states and ranges between 4.6 percent to 12.5 percent. The duty has been one of the key reasons for black money generation in the sector and many experts have called for at least reduction in the rate to increase the tax compliance. An abolition of the duty will reduce the prices of houses significantly, benefitting the customers.
Naidu said this while addressing an event organised by the realtors body CREDAI. He also assured that the GST (Goods and Service Tax) would not lead to rise in prices and certainly not for the affordable housing segment.
He pitched for exempting the segment from service tax under the GST regime so that prices for low-cost homes do not rise.
"Currently affordable housing is exempt from service tax. My ministry has already taken up with the Ministry of Finance the need to continue with this exemption under the GST," Naidu said.
The affordable housing has been given infrastructure status in the Budget and this would go a long way in placing more cash in the hands of home buyers and acting as catalyst for the development of such projects in the market, he said.
Naidu said the ministry has also recommended that the real estate sector should be taxed at a rate "which is revenue neutral and not at a higher tax rate".
On industry demand that stamp duty should be included in GST, Naidu said: "We all know states have in their wisdom not adhered to inclusion of stamp duty under GST. The GST Constitutional Amendment Act also does not provide for it".
The minister said although there is no clarity on the inclusion of real estate within the ambit of GST, the real estate sector would be benefited from this big reform One Nation One Tax.
"One big advantage GST is going to bring the industry is that cascading of taxes i.e tax on tax would become a thing of the past. Input tax credit would be available, thus there is a huge incentive to bring all transactions in the real estate sector within the formal system to enjoy credits," he said.
Last week, the GST Council approved draft of key supporting legislations to enable rollout of the new indirect tax regime from July 1.
The Council approved the final draft of Central GST (C-GST) and Integrated GST (I-GST) and will take up for approval the State-GST and Union Territory-GST (UT-GST) laws at its next meeting on March 16.
With inputs from PTI
Despite the total number of voters in Mumbai increasing by 2 percent at 98.14 lakhs, compared to 95.94 lakh in 2009, the city has seen a dramatic shift in demographics, which may in some way be related to real estate prices.