Online edition of India's National Newspaper Saturday, May 01, 2010

A timely sop for property buyers
R.P. DESHPANDE
Stamp duty reduction on sale agreements and mortgage fees in the State Budget will be of help

One may have observed that the Union Budget for 2010-11 has not given any respite to the common man for buying his dream home. But the State Budget has extended some concessions in the form of reduction in stamp duty charges for various transactions including sale agreements and mortgage fees. Here are a few important concessions announced in the Karnataka Budget 2010-11, which will help the common man: The stamp duty on sale agreements of immovable property (without delivery of possession) has been reduced from 0.25 per cent of sale value consideration, without any upper limit, to 0.1 per cent of sale value, subject to a minimum of Rs. 500 and maximum of Rs. 20,000. For a sale agreement to buy a house for a consideration of Rs. 50 lakh, the stamp duty last year was Rs. 12,500, which will now get reduced to Rs. 5,000. The stamp duty on DTD (Deposit of Title Deeds, executed at the time of taking home loan or loan against property), which was earlier 0.25 per cent of the loan amount with a maximum limit of Rs. 5 lakh has been reduced to 0.1 per cent of loan amount subject a minimum of Rs. 500 and a maximum of Rs. 50,000. If you had taken a home loan of Rs. 40 lakh in the last year, the stamp duty on DTD would have been Rs. 10,000, which will now get reduced to Rs. 4,000. The budget has rationalised stamp duty payable on leasing out property. When a residential property is leased out for less than one year, the stamp duty payable is 0.5 per cent of annual rent and advance (deposit) taken, subject to a maximum of Rs. 500 only. Suppose you have leased out your house for a rent of Rs. 5,000 per month and have collected Rs. 50,000 interest-free deposit, the stamp duty payable would be Rs. 500 only. If the property let out is commercial or industrial, the stamp duty payable would be 0.5 per cent of annual rent plus money advanced, without any maximum limit. The stamp duty for lease period not exceeding five years was one per cent and for more than five years and less than 10 years, it was two per cent on annual rent plus money advanced. It has been now reduced to one per cent for lease period from one year to 10 years.

Further, stamp duty applicable on lease period of 10-30 years which was four per cent of annual rent plus advance taken has been reduced to two per cent for lease period of 10-20 years and three per cent for lease period of 20-30 years. The builders and developers will also benefit from the budget as stamp duty on sale agreement (joint development) which was one per cent of the market value of the property without any ceiling has been rationalised to one per cent of market value with a maximum of Rs. 1.5 lakh. Similarly, stamp duty payable on Power of Attorney (given for developing/construction), which was one per cent of the market value without any ceiling has been rationalised to one per cent of market value, subject to a maximum of Rs. 1.5 lakh. In order to get various benefits available under JNNURM (Jawaharlal Nehru National Urban Renewal Mission), the State Government has been following the stamp duty rates as recommended in the National Habitat Policy. Hence one can expect the stamp duty charges on registration of immovable property to get reduced from the present six per cent to five per cent in the next budget (2011-12). (The author is a Director of Institute of Home Finance and can be contacted at deshpanderp2007@gmail.com )

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