Shot in the arm for Punjab

Geetu Vaid

The first budget presented by the Congress government in Punjab has brought happy tidings for the tottering realty sector in the state. A proposed cut of three per cent in stamp duty will serve as a shot in the arm for the sector that has been plagued by low sales, delays and a significant price correction in the state. 

The 9 per cent stamp duty in urban centres, which was on the higher side, was the main reason that made a large number of owners defer getting the registries of their properties. As a result the state coffers were also denied the revenue earned in the form of stamp duty. Higher stamp duty also led to registries being done on a lower value than what was paid actually to the seller as the buyers wanted to save some money. This meant an increased percentage of cash component (black money) in property deals. “One direct consequence of  lowering of stamp duty will be that more properties will now be registered at the actual sale amount, which is a healthy trend for the realty market,” said Dipin Preet Singh, Director of Mohali-based Westcoast Investment Solutions. A large number of buyers who had purchased apartments in projects by different developers in the state had not got their properties registered after taking the possessions because of the high stamp duty rate. 

In order to boost affordable housing, Minister for Housing & Urban Poverty Alleviation M Venkaiah Naidu had urged state governments to reduce stamp duty a couple of months ago. Punjab is one of the few states that have responded positively. 

The move has got a positive response from industry mavens also. “As such, the stamp duty in Punjab was on the higher side as in most of the other states it currently ranges between 4 and 7 per cent. With the budget announcement it is now on par with other states. This  move  will reduce the purchasing cost for end users and will go a long way in achieving government’s mission of Housing for All by 2022”, said Rohtas Goel, CMD, Omaxe Ltd.   

Echoing a similar sentiment Tejinder Pal Setia, Chairman, Mona Townships Pvt Ltd., said, “The state government should be complimented for presenting a budget which has addressed the concerns of the real estate industry. The decision to reduce stamp duty for urban areas bringing it on a par with that in the rural areas will work to the advantage of buyers, who will now be able to save Rs75,000 on a registry of Rs 25 lakh”. 

Terming it as another step towards creating a positive eco-system for end users an official spokesperson of Emaar India group said, “The stamp duty reduction, along with implementation of RERA, will help in improving buying considerations, which will lift mood in the subdued realty sector; especially for organised players.”

Congress government is generally seen as a real-estate friendly one in the state and with such moves the stakeholders are now expecting better days for real estate growth in the state. “The reduction in ownership transfer fees for plots and houses is also a step in the right direction. The move to formulate the NRI Property Safeguard Act and appoint an ombudsman to protect NRI properties will encourage more and more Indians settled overseas to invest in Punjab”, added Setia.

“This rate cut which has been proposed only for one year will inspire a large number of such owners to get the registries done.  This way the falling graph of revenue earned by the state from this source will also improve. Thus, it is a win-win move for the buyers, developers as well as the state government", added Dipin Preet.