Centre accepts IIMB report on low-value housing

Centre accepts IIMB report on waiving stamp duty on low-value housing

Representative image. Credit: DH photo.

A study by the Indian Institute of Management Bangalore has proposed a complete stamp duty waiver for low-value housing. The Ministry of Housing and Urban Affairs has accepted and released the study report. 

The study entitled ‘Revenue Neutral Model for Stamp Duty Reduction for Affordable Housing’ was commissioned by the National Housing Bank (NHB) and prepared under the guidance of Professor Venkatesh Panchapagesan, Chairperson, Real Estate Research Initiative at IIMB (IIMB-RERI), and co-authored by N Karthik, Advisor, IIMB-RERI. 

The report has proposed a revenue-neutral model that would allow states to lower stamp duty and registration charges for affordable housing. The 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 Centre’s policy of ‘Housing for all’. The proposal, therefore, suggests complete stamp duty waiver for low-value housing. 

“Stamp duty contributes a major portion to states’ revenue pool. Any reduction must be compensated through alternative means in order to ensure their economic health. We showcase 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,” Prof Panchapagesan said in a press release.

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 revenues due to increase in the housing activity and its positive impact on allied industries. We hope that many states will make use of this study while reviewing the stamp duties.” 

Karthik, the co-author of the study, said the key challenge in the project was access to data, and the NHB supported them on this front. According to him, implementing this study will further stir demand and help meet the ‘Housing for all’ policy goals.

The Excel Utility provided along with the study gives states the flexibility to tweak the model on various parameters, thereby computing the trade-off between revenue gained during construction activity and the revenue given up due to stamp duty reduction.

“States can thus gauge and benchmark the gain to implement suitable policies,” he said.