Hyderabad: Following directions from Chief Minister A. Revanth Reddy last week, the Department of Stamps and Registration has started preliminary work to revise the market value of land in the state.
Officials said they expect to earn around Rs 20,000 crore through real estate registration this year (2024-25) by increasing the market value of land. In 2023-24, the government earned Rs 14,295 million.
Revanth Reddy felt that compared to the real estate boom and the actual land prices, the income earned in 2023-2023 will be significantly less. He pointed out that the market price set by the government was significantly lower than the actual market price, and therefore there was a need to revise the government interest rate.
The ministry is expected to submit a report on the revised land market value proposal next month.
Disappointed that the revenue did not meet the target, Revant Reddy called for a review of the market value of the land.
While the real estate sector agrees with the Prime Minister’s ideas on increasing revenue, they feel that a proper study needs to be commissioned to understand where land area should be increased. Recently, land prices and buildings have been reviewed.
The focus should be on maintaining the state’s USP – affordable yet world-class infrastructure.Increasing the base price of land will have a cascading effect across the supply chain.Since most of the taxes and fees are collected as a percentage of the total amount, an increase in one or more components increases the overall cost, said C. Shekhar Reddy, national vice-chairman, CII-IGBC.
For instance, registration fee, stamp duty and transfer fee are currently fixed at 7.5 percent, an increase of 25 percent from the previous 6 percent. The government should try to bring down these three components to about 4.5 percent. This would ensure that volumes would increase and the government would earn more revenue, he said.
Builders and developers pay an impact fee and it is built telescopically. This too, along with land charges, has been revised by 25% from the previous charges. Other fees, such as permit fees, external development, land use fees, and NALA fees, are also collected as a percentage of the total amount. If all this is based on a fixed fee, the impact will be minimal.
Typically, approximately 30 to 33 percent of the total project cost is used at various levels for various fees, levies, fees, and taxes. There is also 5 percent that is passed on to the end consumer. The powers of the Housing Commission are diminished. Almost all units are built by the private sector.
Affordability should not be sacrificed. The government could consider giving some incentives to buyers. For example, registration in the name of a woman member could result in lower rates. Shekar Reddy said registration fees should be rationalised.
The government should consider considering a PPP model instead of selling the land. Public auctions are held to achieve higher values, causing nearby prices to soar. If affordability takes a hit, states won’t be able to remain competitive.
To attract new investment. The pace of real estate will also impact more than 200 ancillary industries related to the real estate and construction sector, which is the second largest source of employment after agriculture.
V. Rajashekhar Reddy, managing director of Credai Hyderabad, said a scientific study with industry participation is needed to assess the disparity in land price revisions. There are cases where people are paying less than the CARD rate on higher floors. The timing of the revision is important and the industry should be given assurance of business continuity. Some kind of incentive for buyers would help. “We are cooperating with the government’s efforts,” he added.
top and bottom
How did income from land rise and fall?
2019-20: Rs 7,061 million, asset document of Rs 16,590 million.
2020-21: Revenue decreased to Rs 5.26 billion and document amount to Rs 1.21 billion due to coronavirus lockdown.
2021: The BRS government revised the market price of land.
2021-22: Rs 12,370 crore, 19.72 million documents.
2022-23: Rs 14,291 crore, 19.47 million documents.
2023-24: Rs 14,295 crore against the target of Rs 18,500 crore.
Data from the stamp and registration department
