What has happened?
- Maharashtra Chief Minister Uddhav Thackeray Wednesday unveiled his government’s biggest coronavirus financial incentive package so far,
- Betting big on the real estate sector for the revival of the state’s economy.
- The government’s latest stimulus package includes measures for lowering upfront costs of construction projects and is focussed on creating an ecosystem that aids domestic demand and building of more homes.
Flat 50% off on premium fees
- Developers availing the benefit will be entitled to pay various premium charges payable to the state and municipal agencies at 50% concessional rates.
- The offer is valid till December 31, 2021.
- New construction projects – regardless of size and type-sanctioned in the state on or before the December deadline will be entitled to the perk for premiums paid during the year.
- Ongoing projects can also avail the benefit.
- In Maharashtra, builders pay premiums for availing additional buildable area or floor space index (FSI) for projects.
- Premiums are payable for compensatory fungible FSI (in Mumbai) for residential and commercial
- For specialised projects – such as IT parks, biotech parks, commercial business districts, etc – premiums are collected for incentive FSI offered by the state.
- Further, premiums are also payable for area concessions offered for staircase, lift and lobby portions in cases of genuine hardship.
- The 50% discount will be applicable to all of these.
- An expert committee, led by HDFC chairman Deepak Parekh, had earlier said that construction premiums and levies make up for 30% of a construction project cost in Mumbai.
- While the panel had also recommended slashing of other fees – including development charges and land under construction fees – for construction projects,
- The government has shot it down.
What’s in it for homebuyers?
- Homebuyers also have reason to cheer.
- To dispel the notion that it was builder-friendly, the government has ruled that builders availing the special scheme will have to-
- Compulsorily bear stamp duty and registration fees for homes sold during the years in the beneficiary projects.
- In other words, buyers investing in newly built homes in the coming year won’t need to pay any stamp duty for their sale agreements.
Will housing become more affordable in Mumbai?
- The 50% reduction in premiums will definitely result in approvals to many more projects and increased housing stock in Mumbai and the rest of the state.
- However, Mumbai – where the average cost of a roof over one’s head is an eye-popping Rs 2.8 crore – has long defied the simple economics of abundant supply acting as a check on price rise.
- Developers certainly feel that the sector-specific stimulus will result in homes that are more affordable.
- Income from construction and levies is the third highest revenue grosser for the Mumbai municipality, India’s richest civic body.
- But with the construction industry reeling under a prolonged lockdown, the BMC’s income from the source had witnessed a sharp dip in the last four years.
- Consider this. In 2017-18, the BMC had earned Rs 4193 crore from construction premiums and levies.
- But by 2019-20, this had dropped by over 40% to Rs 2993 crore.
- Between April to August this year, the civic body managed to collect only Rs 262 crore amid restrictions in construction activity due to the lockdown.
- Ahead of the 2019 assembly polls in Maharashtra, the previous Devendra Fadnavis-led government had also lowered premiums for additional FSI.
- In September, 2020, Mumbai civic commissioner Iqbal Singh Chahal, while consenting to the government’s proposal to slash premiums, had expressed concerns that the move could lead to a further drop in revenues.
- This is the second fiscal stimulus extended to the sector post the easing of coronavirus curbs.
- The state had previously lowered the stamp duty payable for sale transactions by 3% between September 1 and December 31, 2020 and 2% between January 1, 2021 and March 31, 2021,
- Which has resulted in an increase in the volume of property transactions in the September-December period as compared to the same time last year.
Q) ‘Transfer of property’ is mentioned under which list of 7th schedule of Indian Constitution?
- Union list
- State list
- Concurrent List
- Its not mentioned in any list