1% stamp duty hike likely to overcome Q1 property revenue shortfall
Bengaluru: Revenue shortfall from property registration in the first quarter of this fiscal has prompted the Karnataka govt to actively consider increasing stamp duty by 1%. The stamp duty was last revised in 2013.
At present, the govt levies 5% stamp duty on the guidance value (minimum selling price of property fixed by the govt), 1% registration fee, 0.5% cess, and 0.1% surcharge. In all, property buyers pay 6.6% in cess and duty. They might end up 7.6% if the govt clears the hike proposal.
Chief minister Siddaramaiah, who holds the finance portfolio, convened a meeting on June 18 to review the performance of the department of stamps & registration.
Taking a serious note of the shortfall, he reportedly directed both finance and stamps & registration departments to take measures to improve revenues. Finance officials suggested upward revision in stamp duty. Sources said the CM will take a final call once there is consensus between revenue and S&R departments.
Karnataka has the lowest stamp duty among its neighbours, barring Andhra Pradesh. Tamil Nadu levies 11% that includes stamp duty and registration fee, and Maharashtra imposes 7%.
Underwhelming revenues from property registration have been a cause of concern, as it potentially implies a sluggish real estate sector. While Siddaramaiah fixed a target of Rs 26,000 crore for 2024-25, he was forced to downscale it to Rs 24,000 crore. But the department could collect only Rs 22,500 crore by the end of the year.
This fiscal, the CM fixed a target of Rs 28,000 crore. Going by this, the department was to have collected Rs 7,000 crore on average in the first quarter that ends on June 30.
It collected Rs 5,556 crore, logging a 35% shortfall.
"The govt is obviously worried about the revenue shortfall, but a stamp-duty hike is not the solution. It should realise that the shortfall is mainly due to the ill-implementation of the policy mandating e-khata for registration and tech glitches in the Kaveri portal. The govt does well to rectify this instead of hiking stamp duty," said T Bhaskar Nagendrappa, state president of Credai (Real Estate Developers' Associations of India).
He said the govt increased its guidance value by 39% in 2023, and any hike in stamp duty would make property purchase costlier and negatively impact the sector. "The irony is the govt decided to keep sub-registrar offices open on weekends. But what's the use if the portal is glitch-ridden and e-khatas are not issued," said one sub-registrar.
Ends
GFX
Sagging S&R Revenues
2024-25
Original target: Rs 26,000 crore
Revised target: Rs 24,000 crore
Achieved: Rs 22,500 crore
2025-26
Annual target: Rs 28,000 crore
Target till June 30: Rs 7,000 crore
Achieved till June 19: Rs 5,556 crore
Source: GoK
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