Builders in Gujarat want duty waived for homeowners in redevelopment projects, ET RealEstate

July 7, 2023

AHMEDABAD: Property developers now want stamp duty exemption for homeowners in redevelopment projects.

The Bombay high court recently announced a judgement that said that if stamp duty for a redevelopment agreement is paid then it cannot be charged for individual units. Developers in Gujarat are now asking for this, saying it will boost redevelopment projects.

The association of real estate developers’, Credai, raised the issue with the state government, saying that while existing house owners of a society get a new house after redevelopment, they are not actually buying a new house and should be exempted from paying stamp duty.

Tejas Joshi, president of Credai Ahmedabad, said, “Ahmedabad has massive potential for redevelopment because there are a lot of old societies. Currently, the existing owners must pay stamp duty for the new house they get after redevelopment. We want that existing owners be given exemption from paying stamp duty and like Maharashtra, the new sale deed should be done on a Rs 100 stamp paper. This will decrease the financial burden on existing owners. We are demanding this relief based on the Bombay high court judgement of February.”

The Bombay high court had set aside and revoked circulars in Maharashtra that had said that a permanent alternate allotment agreement (PAAA) executed between the developer and members of the society needs to be stamped again even though the development agreement executed between the developer and the society is already stamped.

“The stamp duty on the development agreement includes the reconstruction of every unit in the society building. Stamp duty cannot be levied twice,” a division bench of the Bombay HC had ruled.

Chartered accountant Manan Doshi said, “In most cases in Gujarat, house owners have to pay full stamp duty after getting the redeveloped house.

This increases the costs involved for existing owners. In some cases, owners ask the builder to pay the stamp duty. That cost is then transferred to those buying the new units.”

Many redevelopment projects in the state have been put on hold due to the recent jantri rate increase, because charges for paid FSI have doubled and developers say the projects are no longer viable after the increase.

  • Published On Jul 7, 2023 at 09:18 AM IST

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