Affordable houses may soon be exempted from stamp duty, which varies between 4% and 8% of the transaction value.
The Ministry of Urban Development and Housing has made an effort to convince the state government for excluding the stamp duty levied on affordable housing. Since, stamp duty falls under the state list and the responsibility of fixing and collecting the same lies with the state, it is necessary for the Union to take the consent of the state government before coming onto a decision.
While addressing the Confederation of Real Estate Developers' Associations of India and the Union minister for Urban Development and Housing, M .Venkaiah Naidu, said that Centre would ensure that there was no net tax escalation in the housing sector, particularly the affordable housing segment, following the implementation of the goods and services tax (GST).
He further added that the inclusion of the real estate sector in the GST framework would help the industry to bring in more transparency and accountability on the part of the builder. Recently in Unitech Residential Resorts (Unitech Vistas) Ltd vs Atul Gupta, the apex court slapped a penalty the real estate giant for delay in handing over of flats. The bench directed them to deposit 14% interest on Rs 16.55 crore invested by 39 homebuyers.
Another land mark judgment paved the way for the homebuyers to collectively drag the builder directly to the National Consumer Disputes Redressal Commission (NCDRC) for delay in delivering the projects instead of taking the recourse of the District Consumer forum.
These judgment is a boon to middle-class flat owners, who find it easier to come together to fight rich realtors who have deep pockets and employ top lawyers to find legal loopholes to frustrate flat buyers from making claims against them. Housing being one of the basic necessities for survival often witnesses huge investments by the people and such lump sum share must not be cheated with.
Another major legal development in this sector occurred with the adoption of Real Estate (Regulation and Development) Act. The objective of the bill is protection of interest of the purchasers by promoting transparency, accountability and efficiency in the construction and execution of real estate projects by builders.
Many clients have contacted us time again raising the issues they are facing with regard to purchasing and possession of property and want us to take up their matters in court. Earlier, most would shy away from legal recourse.
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.
Service tax that amounts up to 5.35% of the property's selling price is not levied on affordable housing, keeping in mind the kind of importance housing holds in the life of a common man. The Urban development ministry is amidst of deliberations with the Finance ministry to continue with this service tax exemption under GST as well.
He added that recommendations have been made to the Finance ministry that the housing sector should be taxed at a rate which is revenue neutral, and not a higher one.
All the efforts made by the urban development and housing ministry are to avoid any rise in prices of these affordable homes post implementation of GST.
Since there are several lacunae in the laws related to the safety of home buyers, the state and the centre are together introducing various protective provisions to reinstate the faith of the people and develop the much needed confidence to infuse more investment into this sector.