Maharashtra cabinet on Wednesday approved 50% reduction in premium for real estate projects under the new Development Control and Promotion Regulations (DCPR) rule 2034 across the board for on-going and new projects upto December 31, 2021.
This decision however comes with a condition that builders will have to pay premiums based on the 2019 ready Reckoner (RR) rates or the 2020 rates, whichever is higher.
Builders who opt for the 50% reduction in premiums will also have to pay the entire stamp duty when they sell flats to buyers by giving an undertaking to the local bodies.
“This move will go a long way in expediting the project completion and the industry will witness new launches in the market. This reduction in premiums will help in quick turnaround of projects and uplifting industry sentiments. Also, the reduction in premiums for new launches will help the development at the lesser input cost and over a period of time there is possibility of lower price for new inventories that shall come into the market,” said Niranjan Hiranandani, national president, NAREDCO.
“It is however important to realize that the charges paid for approvals include development charges and other charges under other heads. Effectively this means the total benefits will be much less than 50%, said Rohit Gera, managing director, Gera Developments
Recently, former chief minister of Mahrashtra Devendra Fadnavis had accused the Maha Vikas Aghadi government of offering huge sops to a preferred set of developers under the garb of boosting demand in the economy.
Fadnavis had alleged a substantial decrease in RR rates such that it benefited certain plot holders to the extent of a 70% reduction in payment. These plots are owned by developers in the western suburbs by the seafront, in the eastern suburbs and in the island city, he claimed.
Soon after the lockdown started, the Maharashtra government appointed a committee under HDFC chief Deepak Parekh, which suggested cuts in stamp duty and premiums.
In August, the state government had announced the reduction in stamp duty on property registrations to 2% for transactions between September 1 and December 31 from 5% earlier. The stamp duty will be 3% for agreements to be registered between January 1 and March end.