Slump in realty sector jolts Punjab revenue earnings
Revenue from stamp duty and registration is a major source of income for the government, after VAT and state excise duty
The Punjab government’s exchequer continues to be affected by the slowdown in the real estate sector, with revenue generation from stamp duty and registration fee show no sign of picking up anytime soon.
Finance department data show a decline of 10 per cent in receipt collection in the first nine months (April-December 2012) of the current financial year compared to corresponding period of the previous year.
Considering the decline in revenue realisation, it would be difficult for the state government to meet the target it had set in the FY13.
Revenue from stamp duty and registration is an important source of income for the state government after VAT and state excise. According to state government data, the revenue realised from stamp duty and registration fee was Rs 2,133.80 crore during April-December 2012, compared to Rs 2347.60 crore during the corresponding period of the last financial year. In such a scenario, the state government’s plans to mop up Rs 3,375 crore from stamp and registration duty seems to be near impossible.
According to Budget document, in the current financial year, the state government has estimated revenue from stamp duty and registration charges for property transaction Rs 3,375 crore, which is approx 22 per cent higher than the corresponding collection during the last financial year.
Comparatively, the previous year’s revenue from stamp duty and registration fee was Rs 2,773.75, an increase of 19 per cent over previous year.
Speaking to Business Standard, Gurmit Singh, a property dealer in Punjab said, “Overall sentiments is low. High interest rates and slowdown in real estate sector has affected the property transaction.
At present transaction is very low, which has affected revenue from stamp duty and registration. The centre government have to take some steps in forthcoming Union Budget to boost the real estate sector, then only we can anticipates some recovery in real estate sector.”
Real estate consultant and advisors were also of the view that imposition of cess on registration of land by Punjab cabinet in August last year, is also affecting the real estate transactions, thus affecting revenue.
It is pertinent to mention here that the Punjab cabinet in August last year, approved the proposal of revenue department for levying the social infrastructure cess for health and education at the rate of 1 per cent on the time of registration of land. Also, the upper limit for registration fee had been increased from Rs 30,000 to Rs 2 lakh.
The increase in mutation fee and facilitations charges at the Fard Kendras and Suvidha centres had also been approved by the Cabinet. The state government took these steps citing the reason that it would help in mopping up an additional revenue of Rs 480 crore every year.
Presently, the stamp duty in Punjab is 5 per cent for Men and 3 per cent for Women.
In class A municipalities and cities having municipal corporations 3% social security cess is levied in addition to stamp duty in areas within municipal limits and in villages 5 kms from municipal limits in these cities.