Maharashtra government mulling taxes on virtual land transactions
MUMBAI: Maharashtra Vikas Aghadi government has given the good news to the real estate sector by reducing the stamp duty. However, they should also brace up to pay a minimum 3 per cent stamp duty on virtual land transactions.
The virtual land is called Transfer of Development Right (TDR) that has been generated on the reserved plot imposed by the government for various amenities like hospital, school, playground, recreation ground etc. The owner of this private plot can get the TDR certificate in lieu of his plot and this TDR – the virtual space can be sold in the market at the prevailing property rates.
In Mumbai, developers always buy this TDR to put the additional floor on their proposed buildings. “The TDR is also land and is in available virtually. But it can be used to construct the houses and that is sold in the market. This is sort of the property transactions only,” said a government official.
He added “If the 5 per cent stamp duty is charged against the total cost of the property, then TDR selling is also transactions where money is involved. Therefore, the government has decided to charge the stamp duty on TDR,” said a government official from revenue department adding the proposal has been submitted to the finance minister Ajit Pawar who is likely to take the decision soon.
He said that Ajit Pawar had a meeting a few days back where he had asked the officials to submit ideas about how the government revenue can be increased. “In this meeting, this idea was suggested and Pawar promptly accepted it and promised to implement once the State Assembly’s budget session is over,” he added requesting anonymity.
Manohar Shroff, vice president of Maharashtra Chamber of Housing Industry said that the government is helping in one way by reducting stamp duty in Mumbai, Pune and Nagpur but on the other hand it is taking away this benefit by bringing stamp duty in TDR transactions.
“In Mumbai, the virtual land is very limited so the developer has no options but to buy the TDR to construct the high rises. If the developers have to pay stamp duty over TDR transactions, then the property prices may go up again,” Shroff added.