Real Estate Shares Rally After Maharashtra Government Slashes Stamp Duty
Shares of real estate companies rallied after the Maharashtra government slashed stamp duty on real estate transactions by 3 per cent until December 2020 in a bid to revive the flagging real estate market, which has been hit hard by the Covid-19 pandemic. Following the Maharashtra government's move, the gauge of real estate companies on the National Stock Exchange - Nifty Realty index - surged as much as 8 per cent led by DLF's over 10 per cent gain.
The state government on Wednesday decided to slash the stamp duty on sale deed documents by 3 per cent from September 1 to December 31, 2020, and by 2 per cent from January 1, 2021 to March 31 2021.
Stamp duty is the transactional tax collected by the government on property purchases. Stamp duty collection is one of the largest contributor to a state's revenues.
All the real estate shares were witnessing buying interest. Godrej Properties rallied 9 per cent, Prestige Estates was up 8.4 per cent, Sunteck Realty gained 8 per cent, Sobha Ltd advanced 7 per cent, Oberoi Realty moved up by 6.7 per cent, while Brigade Enterprises, Indiabulls Real Estate and Omaxe also gained in the range of 1-5 per cent each.
Welcoming the Maharashtra government's move, Anuj Puri, Chairman - ANAROCK Property Consultants said, "stamp duty cut will push festive season sales."
"Apart from the obvious homebuyer benefits, the government can generate badly-needed revenue via increased registrations after the most severe downturn in recent history. Affordable and mid-segment properties, which are in maximum demand, will see the most traction from such this move," Mr Puri said.
"To ease inventory pile-up and cost overruns, many players have already topped off discounts with added incentives such as booking amount refunds, statutory fees waivers, cashback schemes, easy payment structuring and assorted freebies. This stamp duty rate cut can push sales further into the green during the festive season," he added.
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