Cut likely in property registration tax

Stamps and Registration revenue is on the up, indicating a revival of realty sector

The revenue of the Department of Stamps and Registration, one of the major sources of own tax revenues for the State government, plummeted between FY2007-08 and FY2009-10 — Rs 3,634 crore in 2007-08, Rs 3,148 crore in 2008-09 and Rs 2,817 crore in 2009-10.

The revenue has begun moving upwards for the first time this year: the department collected Rs 3,008 crore till the end of January 2011. It is confident of collecting another at least Rs 300 crore in the remaining two months of the current fiscal.

Though the department is unlikely to reach the revenue target of Rs 3,500 crore fixed in the 2010-11 budget, the gap between the budgetary target and the actual collection has narrowed considerably. This year, the gap is expected to be Rs 200 crore, against Rs 749 crore of the last year and Rs 1,047 crore in 2008-09.

Property transactions

Official sources said property transactions have picked across all cities and towns, including Bangalore, in the current year.

Property developers have begun investing in big projects, especially in Bangalore Urban and Rural districts.

So far, there was no revival of the real estate sector despite the government giving many booster doses in the budget.

In 2009-10, the stamp duty was cut from 7.5 per cent to 6 per cent to encourage people to do property transactions. Besides, the duty on various other property transactions like sale agreement, lease agreement and rent agreement were reduced and simplified.

But none of these measures had any impact on the ailing sector. Instead, the government ended up incurring an estimated Rs 400 crore revenue loss due to the duty reduction, officials said.

Sources said the government may reduce the stamp duty on property registration by a further one per cent -- from the present 6 per cent to 5 per cent -- in the 2011-12 budget, a commitment made by all State governments to the Centre, which wants to usher in an uniform regime in the country. However, there are also chances of the State government refusing to comply with the commitment citing slow recovery of the economy, sources added.

Another notable development in the department in 2010-11 is the implementation of e-stamping system across the State, making it a lot more easier for people to pay the duty. People can drop in at any of the 530 authorised collection centres, including 106 in Bangalore, and collect e-stamp certificates (hitherto document sheets) by paying the duty. The collection centres are available in almost all taluks of the State.

Budget prospects

year    budget target    Actual collection

2006-07    2,586            3,436
2007-08    4,400            3,634
2008-09    4,195            3,148
2009-10    3,566            2,817
2010-11    3,500            3,008 (till Jan-end)

(Note: in crores of rupees)

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