Punjab is witnessing a steep fall in income from stamp duty and registration fee for property in the current financial year, viz 2009-10. With no takers for the sites auctioned by the state in the last few months, there has been a consistent decline in the revenue earned by the state exchequer from these two sources in the last seven months.
Enquiries made by FE reveal that the total collections as on January 31 stand at Rs 1,263.33 crore, much behind the set target. It has become an uphill task for the revenue department of the state to fulfil its ambitious target of Rs 2,000 crore set for the current financial year.
In the last few years, during the real estate boom, the state government had sold sites at considerably high rates during the auctions in various parts of the state. This also led to robust collections of stamp duty and registration fee.
With the state failing to revise the rate of auction sites after the economic slowdown, buyers say the prices fixed by the state are unrealistic, leading to no takers for these sites.
In September last year, the civic body in Mohali could not sell even one of the nine residential sites at the auction. The reserve price for these sites was fixed at over Rs 50,000 per square yard, since Mohali is a coveted area on account of its close proximity to Chandigarh. According to an official in the revenue department, “The economic slowdown and slump in the real estate are the major reasons behind the steep fall. There is also a perception among buyers that the real estate prices are going down. In this scenario, the buyers have often found the reserved prices fixed by the state for property in various areas to be unrealistic, and there has been no takers for these properties. All these factors have led to a fall in the collection of stamp duty and registration fee,” he said.
Officials add that the current financial year is likely to report the lowest collections in the last five years. During this period, the department had shown buoyancy in income. During last financial year, the state government had managed to earn Rs 1,764.93 crore from the revenue department, which seems unlikely this year.
In 2007-08, the state exchequer earned Rs 1,619.29 crore from the collections. The year 2006-07 had proved the most beneficial to the state government, when the country was observing an unprecedented real estate boom. During this period, the department had earned Rs 2019.97 crore.
Interestingly, that year the state had initially projected an income of Rs 1700.00 crore from stamp duty and registration fee collections. But seeing the buoyancy in revenue, the target was revised to Rs 2,000 crores which was also surpassed. Earlier, the year 2005-06 too had reported upbeat collections at Rs 1,791.77 crore.
Where sale of property is concerned, evasion of stamp duty and registration fee has been an old malaise in the state. While property prices and rentals in Punjab may be going strong, forcing even cash-rich corporate houses to rework their strategy for expansion, the collections post sales are low. The efforts of all buyers are to ensure that the minimum stamp duty and registration fee is paid to the state exchequer, to save on payment of registration charges and stamp duty.