Smart Builders but Smarter Government..???
Due to Covid, Govt announced 50% discounts on premiums paid before 31st December 2021 which was then extended upto 31st January 2022.
The announcement was made in October 2020 but implemented from March 2021. Hence effectively it was implemented hardly for 9 months. That too second wave started at same time and work was slow for 3 months.
Societies who wanted to take benefit couldnot take the benefit of this scheme because as per the redevelopment process it takes approx 12 months to appoint and finalise all terms with the developer.
However many developers had their old projects commitment where they took this benefit as they were already apponted or their plans were already put up or they had already taken part approvals.
In this way, the BMC collected revenue of Rs. 15000 crores and passed 15 crores FSI which was record in their history. However they had put a condition that if developer/ promoter wants to avail discount they have to bear the stamp duty of the purchaser.
At the time of paying premium by the developers/ Promoters the Stamp Duty for buying a property was 5%. But the stamp duty will increase by 1% from April 2022, hence those developers who have availed benefit of discount on premiums will have to bear additional stamp duty of 1%.
Hence by absorbing 6% stamp duty, effectively developers will bear additional 0.36% of stamp duty. For eg. if the flat cost is Rs. 1 crore including stamp duty, then effective take away for developer will be only Rs. 94 lacs. In normal scenario, if developer would have quoted Rs. 94 lacs for the buyer, then the 6% stamp duty on 94 lacs would have been Rs. 5,64,000/-. Thus, state Govt will get additional stamp duty of Rs. 36,000/- on Rs 1 crore flat I.e. 0.36%.
Secondly as there is 5% GST payable by the buyer on under construction property, in above case the GST will be Rs. 5 lacs on Rs. 1 crore value. Whereas if the developer would have sold it at Rs. 94 lacs then 5% GST would have been Rs. 4.70 lacs. So by way of GST also, the Govt is benefited of Rs. 30 lacs. I.e. 0.36%
Thus by implementing the condition for stamp duty to be borne by developer has actually made the Rs. 94 lacs value of flat dearer by Rs. 66,000/- which is 0.66%.
Hence from above it is clear that however AAM JANTA must have felt that they will get homes cheaper but actually the Govt will get 1.66% more revenue by way of stamp duty and GST.
15 crores of FSI has passed last year and majority of them are old buildings. That will be equivalent to 13.5 crores of RERA carpet area. Out of which if this is of old buildings, we assume that 50% will be for existing tenants. Therefore roughly 7 crore RERA carpet area must be available for sale.
If average sale rate is assumed at Rs.30,000/- per sq.ft. then there will be roughly sale of Rs. 2,00,000 crore. Revenue for Government by way of stamp Duty & GST on these sales at 11.66% on Rs. 2,00,000 crores will be Rs. 23,200 crores out of which additional revenue of Government will be Rs. 3300 crores due to conditions of bearing stamp duty by the developers.
Out of this collected revenue by MCGM of Rs. 15,000 crores plus estimated future revenue of Rs. 23.200 crores how much will reach to Mumbaikars by way of Infrastructure, cleanliness, Health, education, etc.
However the above FSI and revenue calculations are only for Mumbai & Suburban Mumbai region and that too from only MCGM as approval authority baring other 3 approval authorities in Mumbai such as MHADA, SRA & MMRDA.
Now you only judge that who is more smarter..?
By Nayan Dedhia
Toughcons Nirman Pvt. Ltd.