Stamp Duty reduced in Karnataka: Everything you should
The outbreak of the pandemic affected the real estate sector to a large extent. The realty market in all the prominent cities suffered as the workers migrated back to their hometowns and the buyers hesitated to buy. The lockdown imposed put the construction of on-going projects to a halt as well. To revive the realty market, the Karnataka government has taken initiative by reducing the stamp duty imposed on the properties in the price range of INR 35 Lakhs to INR 45 Lakhs. The stamp duty reduction of 5% to 3%, for properties in the price bracket of INR 35-45 lakhs was announced in the Budget.
This method of reduced stamp duty was followed by many cities in 2020. The Pune realty market is an example of the successful implementation of this model. Pune was one of the worst-hit markets of 2020. The realty market dipped lower than other prominent realty markets and the government reduced the stamp duty imposed to revive the market. This had a great impact on the ready-to-move-in properties as they were sold out. The same is expected in Karnataka.
The Karnataka Realty Market
The Karnataka realty market was also negatively impacted by the pandemic as the sales fell and the unsold stock increased. By the end of 2020, the real estate market of Bangalore, recorded an unsold inventory of nearly 59,350 units across all budget segments. This has led the government to reduce the stamp duty for properties in the affordable housing segments (INR 35-45 Lakhs). This reduction has been granted due to several pleas raised by the real estate players in Karnataka to revive their sales. However, the actual question is whether the reduction of stamp duty from 5% to 3% will have a major impact as it has in Mumbai and Pune. The major difference in the initiative taken by both the governments is that the Maharashtra government reduced stamp duty in all sectors while the Karnataka government has reduced stamp duty for just the affordable housing units. Several industrial experts believe that the reduction in the stamp duty may not have a major impact on the realty market as it had in Mumbai and Pune. The main reason for this is that only 24% of the unsold inventories belonged to the INR 45 Lakh bracket. The major percentage of unsold inventories was in the INR 45- INR 1.5 Crore budget range. 64% of the unsold inventory in this bracket has been quoted by several industry experts to explain why the reduction in the stamp duty may not have an impact as large as it had in Maharashtra. The real estate players of Bangalore are expecting the 2% reduction granted to invoke consumer sentiments and increase the sale of affordable housing units. However, it is recommended that the reduction be granted for 3-5 years as it would provide the builders time to modify their product mix and the consumers with the time to regain their buying capacity.Revised stamp duty charges in Karnataka
The revised stamp duty charges after the budget 2021-2022, in the State of Karnataka, are provided below.| Case | Stamp duty rate | Registration charges |
| Stamp duty for affordable housing units | 5% stamp duty for properties above INR 45 lakhs. 3% stamp duty for properties priced between INR 35 lakhs to INR 45 lakhs | The registration charges for properties in all budget groups remain at 1% of the total market value of the property. |
Bottom Line
Stamp duty and the registration charges imposed are revenue for the government and an added-on expenditure to the real estate investors. The initiative taken by the government to reduce or tackle the loss brought in by the pandemic by reducing the stamp duty has mixed reactions. Some believe that this will help the builders to alter their product mix and increase sales as the reduction will invoke consumer’s sentiments. Assetmonk is a smart investment platform offering products in domestic markets with global standards such as Bangalore, Hyderabad, and Chennai. Some of the projects offered by Assetmonk in Bangalore offer projects with high return and capital appreciation. CHB Series I and II are some of the projects of Assetmonk. Visit the website to know more about investment opportunities.Stamp Duty reduced in Karnataka FAQs:
The stamp duty imposed by the Karnataka government earlier was 5% for all the properties. However, the budget of 2021-2022 provided for the reduction of stamp duty by 2% for properties in the budget bracket of INR 35-45 Lakhs. The stamp duty for properties above INR 45 Lakhs remains at 5%.
The registration charges in Bangalore are 1% of the market value. The budget of 2021-22 does not provide for any reduction in the registration charges.
The property type is considered while calculating the registration and stamp duty charges. Then the percentage (5% in case of property above INR 45 Lakhs and 3% in case of property ranging between INR 35-45 Lakhs) is applied to the market value or the agreement value, whichever is highest. The registration charges are imposed at a rate of 1% for all properties irrespective of the budget bracket. The registration charges are charged on the market value or the agreement value whichever is higher.
