The Maharashtra government recently proposed a 1% surcharge on stamp duty on the sale, lease, gift and mortgage of real estate in Mumbai, resulting in the overall stamp duty to reach 6%. The government has reasoned out the demand by saying that it needs a constant stream of funds for several urban transport projects that are underway.

Our Take

The proposal has received wide criticism, as it would increase real estate prices, hurting pockets of the customer. However, there are states in India where a comparatively higher amount of surcharge is already being levied, like Haryana (12.5%), Assam (8.25%) and Goa (8%).

What makes it a more concerning issue for Mumbai is that property prices here are already at a high. Average property prices in Mumbai are between ₹15,000-20,000 per square feet; a one percent surcharge would mean additional ₹150-200 per square feet.

There exists a correlation between infrastructure and real estate. The real estate sector benefits because of the improvement in infrastructure projects in the area. Some industry experts believe that applying such a surcharge will help reverse the tale to revive losses from mass scale infrastructure projects.