Property prices are set to rise again, thanks to the government's decision to abolish local body tax (LBT) from August 1. It means a loss of over Rs 10,000 crore to the government. So, how does it plan recover the money? By raising the stamp duty.
Property prices are set to rise again, thanks to the government's decision to abolish local body tax (LBT) from August 1. It means a loss of over Rs 10,000 crore to the government. So, how does it plan recover the money? By raising the stamp duty.
Anand Gupta, general secretary of the Builders Association of India, minced no words in explaining its implication for the home buyers. "The govt has abolished LBT and has decided to recover the losses from stamp duty. Developers are not going to pay from their own pockets. They will pass it on to the end users – the buyers only," said Gupta.
If Congress leader Manikro Thakre is to be believed, stamp duty is not the only worry. Worse is still ahead. "The government can also raise the ready reckoner (RR) rates. Since stamp duty is based on RR rates, directly and indirectly, people who have nothing to do with LBT, will have to bear the brunt of the decision," says Thakre.
Abolition of LBT was an election promise of the Bharatiya Janata Party (BJP). The government has done it now and has also made a budget provision of Rs 2,000 crore to compensate the municipal corporations. There are 25 civic bodies across the state, and the LBT has been abolished in most of them. The Brihanmumbai Municipal Corporation is the only exception. Thakre says his party will hold a state-wide agitation. "The BJP government had taken this decision to please a few traders at the cost of the common people.
"Prime Minister Narendra Modi, during election campaign, said the LBT is Looto Bato Tax. Now, his government in the state is acting on his statement. They are looting the common people by imposing taxes on them to compensate a handful of traders. Why should the common man bear the burden of this illogical decision?" Thakre said. For developers, this decision could not have come at a worse time. "There is no sale at all. We are facing a huge liquidity crunch and rise in taxes means rise in property prices. On the one hand, the BJP says that, by 2022, there will be abundant supply of affordable houses, and on the other hand, they are levying new taxes," a developer from South Mumbai told dna.
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