Buying property in Delhi is set to become costlier after a hike in the transfer duty by 1 percent by the unified Municipal Corporation of Delhi. The hike will affect properties priced above Rs 25 lakh across the national capital, media reports said on June 1.
Following the hike, the transfer duty will become 3 percent for women and 4 percent for men, news agency PTI reported, quoting official sources. At present, the transfer duty on the sale and purchase of property in Delhi is 2 percent for women and 3 percent for men.
The Municipal Corporation of Delhi (MCD) took the decision to increase the transfer duty in a meeting on May 31. The proposal, moved by officials of the civic body, was passed by the special officer of the MCD. The special officer is in charge of running the civic body till a new House is elected.
This is the first major decision by the MCD, after its three civic bodies — North, East and South — were unified in May. The move is expected to improve the income of the MCD, which suffered massively in the past two years due to COVID-19 pandemic.
What is a transfer duty?
According to the Statutes of the MCD Act or the NDMC Act, the Delhi municipal corporation can levy a duty on transfers or sale of immovable property within the city limits. The duty is levied as a surcharge on the duty imposed by the Indian Stamp Act, 1899 in Delhi. Apart from the sale of properties, transfer duty is levied on gift of immovable property, mortgage with possession of immovable property and lease in perpetuity of immovable property, The Economic Times reported.
Impact of transfer duty hike
According to Ashutosh Kashyap, Director of Advisory Services, Colliers India, the hike in transfer duty will increase the incidence of transaction cost on transfer cases.
“This move would imply an additional landed cost for secondary purchase. It will marginally add to the lucrativeness of property purchases in the primary market from the developer, which might slightly sweeten the purchase in the primary market,” Kashyap told CNBC TV18.
On the other hand, the municipal corporation will also benefit from the move.
“The money collected on account will imply better funds with urban local bodies to undertake betterment of infrastructure and civic services within the city,” Kashyap said.
Property prices in Delhi
Property price in Delhi and Mumbai are expected to rise between 4-5 percent in 2022 and 2023, according to a recent poll by Reuters. Property prices in Chennai and Bengaluru are expected to increase by 5.5-6.5 percent in the next two years, the poll said.
