Study proposes affordable housing model with lower stamp duty

By: |
November 25, 2020 6:46 PM

A study has proposed a revenue-neutral model that allows states to lower stamp duty and registration charges for affordable housing.

Stamp duty contributes a major portion to the states revenue pool.

A study has proposed a revenue-neutral model that allows states to lower stamp duty and registration charges for affordable housing. The study was commissioned by the National Housing Bank (NHB) and conducted by the Indian Institute of Management-Bangalore (IIM-B). The report ‘Revenue-Neutral Model for Stamp Duty Reduction for Affordable Housing’ has been accepted and released by the Ministry of Housing (MoHUA), Central government, the IIM-B said in a statement.

The report has been prepared under the guidance of professor Venkatesh Panchapagesan, chairperson, Real Estate Research Initiative at IIM-B (IIMB-RERI), and co-authored by N Karthik, advisor, IIMB-RERI. According to the IIM-B, the revenue-neutral model is built around the fact that any resultant loss of revenue for states would be more than adequately compensated by revenue generated through new constructions triggered by the Centres policy of ‘Housing for All.’

The proposal, therefore, suggests complete stamp duty waiver for low-value housing, the IIM-B said. “Stamp duty contributes a major portion to the states revenue pool. Any reduction must be compensated through alternate means in order to ensure their economic health,” said prof Panchapagesan.

He said the team has showcased how the revenue generated through additional construction activity itself is sufficient to compensate for this reduction. “We take a broad-based approach in this study to ensure that all states can seamlessly implement it while highlighting Karnataka as a model example,” Panchapagesan added. S K Hota, managing director, NHB, said, “The study has established that reduction in stamp duty will not adversely impact the revenue of any state and, in fact, may result in higher revenue due to increase in the housing activity and its positive impact on allied industries,” he said.

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