Informist, Thursday, Jul 25, 2024

By Priyasmita Dutta and Sagar Sen

NEW DELHI – In order to nudge states to reduce stamp duty rates on real estate transactions, the Ministry of Housing and Urban Affairs is likely to tie allocations of Pradhan Mantri Awas Yojana Urban 2.0 with cuts in stamp duty, a senior government official said. "In the housing scheme, we plan to put a conditionality that this allocation will only be in those states where, for these particular houses, you reduce the stamp duty below some rate," the official told Informist.

In the Budget for 2024-25 (Apr-Mar), the government proposed to allot 2.2 trln rupees in the next five years under the PM Awas Yojana Urban 2.0, which will address the housing needs of 10 mln poor and middle-class people in cities. The urban housing plan has a total outlay of 10 trln rupees spread across five years. The government is aiming to help citizens construct 30 mln houses in rural and urban areas under the scheme. PM Awas Yojana Urban 2.0 is part of the overall scheme.

Since stamp duties add to states' revenues, many states are reluctant to cut the stamp duty, the official said. "Linking it to a central sponsored scheme may give states a push to actually implement it," the official added.

In her Budget speech on Tuesday, Finance Minister Nirmala Sitharaman had said that the government "will encourage states which continue to charge high stamp duty to moderate the rates for all, and also consider further lowering duties for properties purchased by women."

In an interview today, Revenue Secretary Sanjay Malhotra said lower taxes can result in higher revenues as more income gets reported, and there's less inclination to hide and evade taxes. "It (cutting stamp duty) will have two benefits--one is that these transactions will get recorded so that there are fewer disputes, and the other is that it also helps with the revenue collections.

Under the housing scheme that was launched in 2015, the government has sanctioned 11.86 mln houses in the first phase of the PM Awas Yojana for urban areas, of which 8.5 mln houses have been completed, according to data from the Ministry of Housing and Urban Affairs. Nearly 2 trln rupees were allotted for the project, of which, 1.64 trln rupees have been released till July. Typically, these houses could be up to an area of 30 square mtr, but the state and Union Territory governments can increase the size of houses in consultation with the Centre. End

Edited by Manisha Baxla

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