Maharashtra Construction Premium’s 50% Reduction till Dec 31, 2021

The Maharashtra government will slash construction premiums and levies by 50 per cent till December 31, 2021. The announcement, expected at the next cabinet meeting, is expected to give a boost to the real estate sector. The s

BY Realty Plus
Published - Tuesday, 15 Dec, 2020

Maharashtra Construction Premium’s 50% Reduction till Dec 31, 2021

The Maharashtra government will slash construction premiums and levies by 50 per cent till December 31, 2021. The announcement, expected at the next cabinet meeting, is expected to give a boost to the real estate sector. The state has already reduced stamp duty from 5 per cent to 2 per cent, which has led to an increase in property sales. Soon after the lockdown started, the government appointed a committee under HDFC chief Deepak Parekh, which suggested cuts in stamp duty and premiums. There has been a steady increase in the registration of flats in Mumbai recently. In September, October and November, the city saw the registration of 5,597, 7,929 and 9,301 flats, respectively. Sales have picked up, but builders are not starting new projects, which can lead to a slump later. Every year the BMC earns Rs 2,600 crore from premiums. This year it was just Rs 560 crore. Initially, there was an objection from BMC that they would lose 50 per cent of their revenue. But this loss is notional. If 50 per cent concession is given, then income would increase as more builders would start work. The BMC collects premiums on FSI and various services. In the past few years, these levies have been a major source of income for the municipality. Along with Mumbai, premiums for construction in cities such as Thane, Navi Mumbai, Ulhasnagar, Vasai Virar, Kalyan Dombivali, Panvel, Kulgaon Badlapur, Ambernath, Mira Bhayander will also be cut. This move to reduce the premium is coming at the right time. It is long overdue and will give a big boost to the industry. In Mumbai, the cost of land is huge and this accounts for a big chunk of the project," said Rahul Asthana, former Mumbai Metropolitan Region Development Authority commissioner. "The premiums form a part of the costs. This concession will give marginal relief to the industry."