NEW DELHI: Niti Aayog has suggested that the Centre work with states to lower stamp duties and also expedite release of land caught in litigation due to archaic urban land ceiling act to check black money in real estate sector and make housing affordable.
The government think tank recommended providing monetary or non-monetary compensation in case of revenue loss to the states due to reduction in stamp duty. In its three-year action plan, the Aayog highlighted that a key factor contributing to inflated land prices has been the flow of illicit money into real estate.
“Therefore, attacking black money would have the important beneficial side effect of bringing land prices down and making housing more affordable for low-income families,” said the plan, adding that one important factor encouraging the flow of black money is high stamp duty.
“Lowering the stamp duty for real estate sales at the state level will limit incentives to carry out transactions using unaccounted wealth,” the plan said, adding that in the long run, lower stamp duties would help create a more efficient property market.
The Aayog argued that in states where the stamp duty was high, revenues were likely to rise because the decline in duty would discourage buyers from under-declaring value of transactions.
The lower duty would also encourage buyers, who are otherwise deterred from entering the market, which would work towards raising revenue, it said. Gujarat successfully lowered its stamp duty to 3.5 % from about 5%, with increased revenue from other sources making up the loss.