Karnataka govt slashes stamp duty on flats below ₹45 lakh

In a bid to encourage the lower middle class and the poor to buy a flat, the BJP-led government in Karnataka has said that the stamp fee will be reduced to 3% from 5%. This will apply to flats costing between 35 and 45 lakh rupees.

The Stamp Act, 1957, has been amended by the State Legislative Assembly, lowering the stamp tax. However, this 2% discount is only valid for first-time registrations, or main sales in other words.

Due to the coronavirus pandemic, lakhs of units in Bengaluru and other cities have remained unsold, according to Karnataka Revenue Minister R Ashoka. According to the minister, the stamp duty cut will benefit both the real estate industry, which is dealing with a glut of inventory, and low-income families.

“The Karnataka Government’s move to decrease stamp duty by 2% will provide minimal support to the real estate sector,” said Shantanu Mazumder, Executive Director – Karnataka, Knight Frank India. Although the change is progressive, it will have only a little impact on sales because the tax rate is restricted at 2% for homes valued less than 45L. While homebuyers will save money, the volume of sales below 45L will be limited. The impact would have been better if the Maharashtra government had slashed stamp duty across all price groups, as it did. Limiting it to assets worth up to 45 lakh rupees may not result in significant volume.”

The bill implements a promise made by former Karnataka chief minister BS Yediyurappa when he presented the state’s budget in March 2021.

The decision to reduce stamp duty was made months ago during a Cabinet meeting headed by Yediyurappa.

With this, Karnataka has joined the bandwagon of States, which understand that this (stamp duty cut) is by far the single-biggest housing demand booster.