The West Bengal government, in its budget for the financial year 2021-22, has announced a two percent reduction in stamp duty rates and a 10 percent cut in district collector rates. Both these measures are likely to have a multiplier effect on the proceeds and real estate market of West Bengal.  

The relief extended by the West Bengal government in the form of a two percent reduction in stamp duty and a 10 percent cut in circle rates is likely to act as a catalyst for the real estate industry in the upcoming quarters. At present, a property valued up to Rs 1 crore in West Bengal attracts six percent stamp duty in urban areas and five percent in panchayat areas. Properties priced above Rs 1 crore draw an additional one percent stamp duty in both rural and urban areas. Given the relaxation, the stamp duty for properties priced up to Rs 1 crore will come down to four percent and three percent in urban and rural areas, respectively. For properties above that ceiling, the effective stamp duty rates would be five percent and four percent in urban and rural areas, respectively. This means that a homebuyer in West Bengal will save as much as 30 percent on the stamp duty payment. However, the benefit of the reduction in stamp duty and circle rates, which is the minimum value at which a property is purchased or sold, will only be available if the property registration process is completed by October 30, 2021.

Stamp duty rates in West Bengal

Jurisdiction

Property price

Stamp duty rates (if the property is registered after October 30, 2021)

Stamp duty rates (if the property is registered by October 30, 2021)

Urban

Up to Rs 1 crore

6%

4%

Rural

Up to Rs 1 crore

5%

3%

Urban

Over Rs 1 crore

7%

5%

Rural

Over Rs 1 crore

6%

4%

Circle rates have been slashed by 10 percent


As opined by the experts, the decision will help boost the real estate demand in the ensuing months and hence, pave the way for industry revival.

Expressing elation on the decision, Nakul Himatsingka, Managing Director, Ideal Group, says, “The reduction in stamp duty rates will help the prospective home buyers significantly and drive sales. Further, the reduction in circle rates will help remove the anomalies that existed in certain areas where rates were higher than market price. Together, these measures will help augment the residential demand across multiple micro-markets.”

Echoing similar sentiment, Jitendra Khaitan, Managing Director, Pioneer Property Management Limited, avers, “Following the announcement, a homebuyer will be able to save up to 40 percent of the present stamp duty rates. There are few areas where circle rates were higher than the actual transaction value. The difference in the transaction value and the circle rate was penalising the buyer and the seller in the form of an additional income tax. With the reduction in collector rates, the gap between the transaction value and the circle rates will diminish, which will uplift the market sentiment unexpectedly.”

The decision of the government will not only lower the transaction cost for the buyers but also facilitate faster clearance of the existing inventory across the State. This will further encourage the developers to launch new projects and infuse fresh investment into the sector. For the government, the move will help accelerate revenue, which is projected to increase up to Rs 7,200 crore in the current financial year, as against Rs 6,200 crore in FY 2020-21.

In addition to the stamp duty reduction, the government has also announced the construction of 20 lakh houses for people belonging to the SC/ST category. A corpus of Rs 1,500 crore has been allotted for the development. Also, around 45 lakh construction and transport workers will be provided Rs 1,000 under the Social Security Scheme. Together, these announcements will help restore West Bengal’s real estate on the growth trajectory.