High stamp duty a significant deterrent

[Peitz26]

The real estate wave passes through different phases. Currently in India particularly in Kerala, the wave is on a rise. This is mainly due to the increased inflow of foreign investments, and the arrival of new high profile projects like the Smart City, and Vallarpadam Container Terminal etc in Kochi. Kochi is the economic and IT capital of this small coastal state In India.

Likewise, there are other factors like rising bank rates, stamp duty etc, which curbs the real estate boom in any area. Real estate Kochi has been seeing a real boost in the past couple of years. This has been in direct response to the number of major developmental projects in the offing.

However, with banks rates rising, many people are thinking twice before investing in immovable properties. It is to be hoped that the current stamp duty will not only not be hiked but also will be significantly reduced to encourage people to invest more in Real estate Kochi.

The stamp duty often acts as a significant deterrent to property deals, especially when the duty rates are high. It can reduce the volume of transaction, and hinder transfer of property. A smoothly functioning market in property serves a useful economic purpose.

Often when the stamp duty is high, many property transactions are deferred. Even when transactions do take place, these are recorded at values less than the full consideration paid for. High stamp duty rates lead to under-valuation of the transaction and results in revenue loss.

Stamp duty is a tax payable to the government. The under-declaration of property value to evade this tax results in the making of black-market money

Unlike in India there is no attempt to evade the duty by under-valuation in UK. Constant efforts at rationalization in response to the public demand and market forces result in frequent changes in the structure of duties in UK. In Australia, stamp duty rates are very low and in certain cases have been exempted.

In India, some States levy very high rates of stamp duty. There is a positive move by various policy makers to reduce stamp duty and to increase the flow of property transactions in the Indian market.