Levy of 30% planned on each transaction; move aims to boost revenue collection
Faced with a sluggish property market, the Maharashtra government for the first time has proposed a stamp duty on transactions of transferable development rights (TDR) in Mumbai.
A TDR is issued to owners who surrender their land, reserved for playgrounds, markets, gardens and other amenities, to the municipal corporation. The generated development rights certificate is tradable in the market, and can also be loaded on a relieving plot north of the city.
In 2019-20, the revenue collected by the government on property deals dipped by 5.93%, while there was a 14.23% drop in registration of conveyance documents across the State, as per the latest data from the office of the Inspector General of Registration and Stamps.
To shore up revenue, the government is considering levying a stamp duty of 30% on every transaction in the TDR market, estimated to be worth over ₹5,000 crore in Mumbai alone by industry experts. The decision is estimated to generate ₹250 crore, officials said.
As per the latest data presented to Revenue Minister Balasaheb Thorat during a meeting, the number of property deals registered in Maharashtra dipped to 8,10,717 in 2019-20 from 9,45,296 in the previous year — a drop of 14.23%. The revenue collection on these transactions dropped to ₹12,409.67 crore in 2019-20 from ₹13,192.49 crore, a drop of 5.93%. The Stamp and Registration Department has now proposed a slew of measures. including 30% stamp duty on market value of land on which the TDR is generated.
“This is a significant move to increase revenue. This has been difficult to propose since the consideration for a TDR deal is hard to ascertain most times. We have adopted the market value of land on which TDR is traded as the basis of this levy, if and when approved by the government,” State Inspector General of Registration and Stamps Anil Kawade told The Hindu.
The drop in document registrations — including conveyance deeds, mortgages, and leave and license agreements — has also been significant, falling to 19.60 lakh in 2019-20 from 28.82 lakh in the previous year.
Mr. Thorat and Deputy Chief Minister and Finance Minister Ajit Pawar held review meetings this week to suggest a number of measures to increase revenue. The target for 2020-21 is expected to be set at ₹30,000 crore as against the ₹21,741 crore realised in 2019-20, once the measures are implemented, officials said.
“We are looking at a number of measures to shore up revenue, including rationalisation of the ready reckoner rates, which have not been increased for the past two years,” Mr. Thorat told The Hindu.
Apart from rationalising ready reckoner rates, the government will also amend Article 51(a) of the Maharashtra Stamp Act, 1958, to incorporate changes suggested by the Centre to collect higher duty on sale and purchase of shares/securities and commodities traded in authorised exchanges. The department has also suggested 13 new corporations and councils be considered in valuation of the ready reckoner.
“Additionally, land around major projects such as the Navi Mumbai Airport, which is currently valued in square metres, while the ready reckoner continue to base the valuation on a per hectare basis, will also change. This is one of many other types of ready reckoner rationalisation we want to carry out,” said a senior government official.
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