Revenue collection drops as note ban hits property registrations

Karnataka sees marginal jump in registrations of flats

Revenue collection drops as note ban hits property registrations

While there is sluggish growth in registration of sites and buildings due to scrapping of high denomination notes on November 8, registration of apartments in Karnataka has seen a marginal increase.

However, overall property registration has come down across the state, pulling down revenue collection. 

According to statistics available with the Department of Stamps and Registration as on Friday, between April and October 2016, the registration of apartments across the state was down by 3,443 documents compared to the same period last year.

Interestingly, in November and December, the document registration went up by 63 (in absolute numbers). Of the total apartments registered in the state, 80% to 90% are in Bengaluru.

However, registration of property documents as such has seen a dip after November 8. After scrapping of high denomination notes, a total of 1,16,093 immovable properties were registered, fetching a revenue of Rs 593 crore to the department. During the same period in 2015, as many as 1,41,339 properties were registered, resulting in revenue of Rs 615 crore. The negative growth that began in November continued in December. But December proved to be a better month.

While the shortfall in target of stamp duty and registration fee fell by Rs 215 crore in November, the deficit in December was Rs 205 crore.

What are the reasons for the sale of apartments not taking a major blow despite demonetisation? According to bureaucrats, it is difficult to comprehend. Among the many possible reasons, one could be IT/BT/MNC company employees are continuing to invest in purchase of flats in Bengaluru by raising bank loans. Another could be easy availability of bank loans for properties with clear titles. Compared to land prices and house building cost, flats are cheaper and hence, genuine buyers are not hesitating to invest in flats.

Official sources said that lakebed encroachment clearance drive had hit the sale of apartments in a big way post-October last. But even that stabilised from the beginning of March 2016. In 2015-16, a total of 59,327 apartments were registered. And, till December 22, 2016, it was 35,274. Before the demonetisation itself, the registration was down by 11%, thanks to the short-lived drive against lakebed encroachments. The average registration of apartments is 4,000 a month now, while it was nearly 5,000 last year.

The state has set a revenue collection target of Rs 9,100 crore for the fiscal year 2016-17 and the present collection is Rs 5,731.76 crore. The department is not in a position to confidently say whether it would reach the revenue target. The documents of immovable properties registered in 2016 are 12,85,108 while they were 18,39,876 in 2015. It is difficult to gauge whether people would purchase properties that would match the revenue target of the government. Property purchase and sale depends much on the policy decisions to be taken by the Centre, the sources said.

Realty reality

From April to December 25, 2015-16
Property documents registered: 18,39,876
Revenue target: Rs 8,200 crore
Revenue collected: Rs 8,248.78 crore
From April to December 25, 2016-17
Property documents registered: 12,85,108
Revenue target: Rs 9,100 crore
Revenue collected: Rs 5,731.76 crore

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