Property buyers may have to spend more on stamp duty this year as the Public Works Department has raised the schedule of plinth area rates for building valuation.
The common schedule of plinth area rates has been raised by 7.3% and this would lead to an increase in the value of buildings and indirectly a hike in the payment of stamp duty, officials said.
Every year, the PWD releases the common schedule of plinth area rates for the valuation of various types of buildings, based on which stamp duty is collected by the Registration Department and rental value of a structure is arrived at. This year, the new plinth rates would be effective from August 16 for a year.
While the average increase is 7.3% across the State, the rise in plinth area rates varied from 8.03% to 8.76% depending on the cities and towns.
Officials of the PWD said the plinth area rates are calculated based on the type and quantity of construction materials in a building, labour charges and the type of structures, including those built with brickwork, cement concrete structure or ones with thatched or tiled roof. “We calculate the plinth area rates based on various factors, including schedule of rates and Reserve Bank of India Index,” said an official.
There would be an overall 0.7% increase in the stamp duty to be paid as the building value has been revised this year. For instance, if a building was worth ₹1 crore last year, its value would be ₹1.07 crore this year, for which the buyer would have to pay the stamp duty, officials said.
However, officials noted that the revised building valuation was less compared to last year when the average annual increase was nearly 10%. Various factors, including the dip in demand for construction materials, during the lockdown period, had influenced the plinth area rates.
This common schedule is also used to calculate rental rates by the government and private owners. “We also assess the value of buildings in disproportionate assets cases of Directorate of Vigilance and Anti-Corruption, based on this plinth area rates,” the official added.
However, builders and real estate developers noted that the rise would only discourage consumers from buying property. Though the hike may be cited as marginal, consumers would have to pay a stamp duty of 7.7%.
Suresh Krishn, president-elect, Confederation of Real Estate Developers’ Association of India — Tamil Nadu (Credai), said the purchasing power of consumers had already dipped during the pandemic. Any increase in building valuation or stamp duty would only disappoint buyers. This had been done without consulting real estate developers. The State government must take steps to encourage home buyers and decrease stamp duty like other states, including Maharashtra, he said.
