Homebuyers feel the pinch as Maharashtra collects Rs 1,800 crore Metro cess from property registrations - Moneycontrol

Representative image.

The Maharashtra government has collected over Rs 1,800 crore as Metro cess in the last 11 months after the government started levying 1 percent Metro cess while registering a property.

This amount is built into the total cost of the property and is levied while paying stamp duty.

While this has resulted in the state exchequer collecting a hefty revenue, homebuyers are at the receiving end.

According to Maharashtra government data, maximum sales in the residential sector are in the Rs 1-2.5 crore range. This means a majority of the homebuyers end up paying Rs 1-2.5 lakh extra during registration.

Also read: Maharashtra's hike in ready reckoner rates to hit affordable-housing projects

"The Maharashtra government has collected Rs 36,197 crore from stamp duty and registrations in the ongoing fiscal, and over Rs 1,881.32 crore has been collected as 1 percent Metro cess," Shravan Hardikar, Inspector-General of Registration and Stamps, told Moneycontrol.

"Out of the Rs 1,881.32 crore collection as 1 percent Metro cess, over Rs 1,200 crore has been collected for Mumbai Metro projects, and over Rs 536 crore for Pune and over Rs 60 crore for Nagpur projects. The 1 percent Metro cess collected by our department is transferred to the Urban Development Department of Maharashtra that ultimately transfers it to local bodies," he said.

Also read: Maharashtra may consider reduction in stamp duty charges: CM Eknath Shinde

How much to pay

In Mumbai, the stamp duty at the time of buying property is 6 percent of the total market value of the property purchased, which also includes a 1 percent Metro cess.

However, if the homebuyer is a woman, the stamp duty is 5 percent, including the Metro cess.

Further, the registration charge is 1 percent of the total property value in the market for purchases below Rs 30 lakh and Rs 30,000 for properties above Rs 30 lakh.

‘Not fair to levy stamp duty on every homebuyer’

While the 1 percent Metro cess is levied on every property purchase in Mumbai, Pune and Nashik, homebuyers opine that this should only be limited to influence areas and should be levied while purchasing a property near a Metro corridor.

Twenty-eight-year-old Mumbai resident Kartik Nag, who purchased a 3 BHK apartment in Nagpur for investment purposes, said: "My sale deed was registered a month ago, and I have paid around 7 percent as stamp duty for around 750 sq ft carpet apartment that cost me Rs 30 lakh. Of this, 1 percent, or Rs 30,000, is Metro cess."

"Now, this is not fair, considering I do not reside in Nagpur and will not be using the Metro. Secondly, there is no Metro corridor passing where my apartment is located. There should be a parameter wherein buildings coming in the influence zone of a Metro corridor should be levied 1 percent Metro cess, and not everyone," he said.

In Mumbai, the Mumbai Metropolitan Region Development Authority (MMRDA) is executing the Metro corridors through self-funding and loans from multinational banks like Asian Development Bank and Japanese International Cooperation Agency (JICA) at minimal interest rate.

Why Delhi is not paying Metro cess

To a question why Delhiites did not have to pay any Metro cess, Partha Mukhopadhyay, Senior Fellow, Centre for Policy Research, explained that the exchange-rate risk on Delhi Metro Rail Corporation (DMRC) loans is borne by the central government, unlike other metros.

Almost a 1-km cost of Mumbai Metro Line 3 is almost Rs 1,000 crore – equivalent to that for 1,500 buses. “Raising revenue from cities where Metro is being implemented is, in principle, not a bad idea," he said.

"However, this cess is on property purchases, regardless of the distance from the Metro, and not a benefit charge, resulting in an increase in property tax. Usually, benefit charges are levied in a manner that reflects benefit from the Metro. This refers to the extent that property prices are likely to increase if they are closer to the Metro," he said.

‘Homebuyers mentality is to save’

Pramod Sharma, a property consultant, operating mainly in the Borivali and Kandivali area of Mumbai, said: "When the stamp duty was 3 percent in Mumbai, there was a boom in the residential real-estate market. There was good movement but when it became 6 percent, the sentiment looks like it has gone a little down."

He added, "One may think, it is only Rs 2 lakh but that is how Indian consumer mentality is. If petrol prices increase tomorrow, we will spend and fill our tank to save Rs 30-50. In the same way, there is a sense of happiness when homebuyers are able to save Rs 1-2 lakh during a home purchase."

Also read: Mumbai witnesses surge in property registrations with 9,268 recorded in February 2023

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