Due to the economic slowdown and demonetization, the Maharashtra government's revenue generated through registration and stamp duty has gone down sharply by Rs 3,547 crore this financial year. According to Maharashtra's financial statement, the government has earned around Rs 20,000 crore in revenue through the sale of stamp duty and registration of properties, against the fixed target of Rs 23,547 crore in the last year.
Similarly, the Land and Revenue department failed to meet their target of Rs 3,200 crore, but instead earned Rs 1,500 crore — a deficit of Rs 1,699 crore. The Excise department suffered a deficit of Rs 1,743 crore as they could only achieve Rs 13,600 crore as against the set target of Rs 15,343. This apart, the Urban Development department earned Rs 700 crore through the sale of floor space index (FSI) and transfer of development rights (TDR) despite setting a target of Rs 5,000 crore, incurring a deficit of Rs 3,300 crore.
Through the Slum Rehabilitation Authority, the government failed to meets its target of Rs 1,067. It achieved Rs 74 crore, incurring a deficit of Rs 993 crore.
"The property market has been going through turbulent times over the last three years. Buyers are not comfortable with buying expensive properties. It is beyond their ambit, resulting in a slowdown in the sale of properties. Therefore, it has impacted the generation of government revenue," said a senior government official from the state revenue department.
According to the official, as per data, most of the revenue was generated through the leasing and renting out of properties only. "Fresh property sales are down. We expect the market to improve during the festive season, which may then help the government earn revenue. Registration and stamp duty and excise taxes are the main sources of revenue for the government. But this year, both the revenue and excise departments have been badly hit. The Supreme Court's verdict of closing down bars and liquor shops within 500 metres of the state and national highways resulted in the closure of 15,000 wine shops in Maharashtra," he added, on the condition of anonymity.
Another official said demonetization also had an adverse impact on the property market. "People generally tend to buy new properties during Diwali or on New Year's Eve. The demonetization announcement was made in November, 2016, leading to a shortage of cash in the market. Over the next 4-5 months, there was no movement in the market due to the cash crunch. Besides, the real estate market hinges on the black money market. In a majority of the deals, sellers demand a minimum of 20-30% of black or unaccounted cash. People were struggling to get cash for daily use, so there was no question of using cash for property transactions," said Anand Gupta of the Builders Association of India.
Gupta also said that the government was itself responsible for the low revenue generation. "There are huge taxes imposed by the government. Now there is a 12 per cent GST on property sales, apart from the 6 per cent stamp duty and 1 per cent registration charge. Buyers have to pay almost 20 per cent of the amount of the total cost of the flat in taxes only. This is the major reason for low sales and low revenue generation," Gupta added.
Manohar Shroff, vice president of the Maharashtra Chamber of Housing Industry (MCHI) said that the real estate market is slowly coming out of a bad phase. "Things are improving and positive changes are also expected. The current market rate is affordable, and soon the property market will pick up," he added.
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