The Maharashtra State government has planned to levy 1% metro cess on property purchases in Mumbai, Pune, Thane, and Nagpur from April 1, 2022. Following the proposed imposition of the metro cess, the stamp duty rates will increase. The government had imposed a similar 1% metro cess in 2017, in cities where the metro work had been under construction. However, it was waived off by the government for two years, from April 1, 2020 to March 31, 2022, due to the economic setback caused by the COVID-19 pandemic . There was a decline in property sales in the first half of 2020 due to the pandemic. However, the reduction in stamp duty in October 2020, pent up market demand and record-low interest rates led to an uptick in property sales volume.
The stamp duty rate will increase to 6% in Mumbai from the current 5% of the asset's value, while it would rise to 7% in Pune, Thane and Nagpur. The metro cess is intended to be used for funding transport infrastructure projects like bridges, metro, flyovers and to help service the loans that funded Mumbai Metro . CREDAI has claimed that such a revision will have an adverse impact on the homebuyers and the real estate industry, which has been affected badly due to the pandemic and is yet to revive completely . The government needs to rethink this move as the likely decline in property purchases will lead to significant revenue losses. It was reported that the stamp duty holiday was a positive turning point in reviving the real estate sector in Maharashtra and led to an increase in demand. A sudden increase in stamp duty can be a significant demand dampener .
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