BHUBANESWAR: A latest government move is all set to inflate housing costs in the state by at least two per cent. The state government has recently revised the benchmark price of flats, raising it by a steep 32 per cent.
Since homebuyers in the state pay seven per cent stamp duty towards registration of a house, they have to shell out around 2.24 per cent more (seven per cent of 32). This would mean someone buying a house worth around Rs 50 lakh has to shell out over Rs 1.12 lakh more towards registration. He would spend Rs 4.62 lakh instead of Rs 3.5 lakh towards stamp duty.
Benchmark value is the price fixed by the government as the standard value to be followed for charging stamp duty irrespective of the actual cost of transaction. Revising the cost fixed in March 2011 for the purpose of assessment of stamp duty and registration fees, the revenue and disaster management department recently raised it almost uniformly.
For a single storey concrete structure residential building, the government will now charge Rs 1,104 per sqft from Rs 839 per sqft so far. The cost goes up as the number of floors increases. For first floor homes, the cost has been revised from Rs 975 per sqft to Rs 1,044. For second floor homes, the per sqft price was revised from Rs 911 to Rs 1,044. For the seventh floor, the cost has been raised from Rs 1,314 to Rs 1,729 per sqft.
The government has also revised extra cost to be added towards provision of various interior items such as use of marble floors, mosaic floor or portico. For portico, the government will calculate the cost at the rate of Rs 724 per sqft compared to Rs 350 now. The extra cost of mosaic floor has been hiked to Rs 33 per sqft from Rs 25 per sqft.
Builders described the government step as a retrograde step. "The government-determined cost is far more compared to the actual cost of flats, putting unnecessary financial burden on the buyers. The revision is surprising since the government is talking about making houses more affordable," said Pradipta Kumar Biswasroy, president, Real Estate Developers' Association of Odisha.
In the peripheral areas of Bhubaneswar, houses are being sold at Rs 1,450 to Rs 1,500 per sqft. As per the revised government valuation, however, the per sqft price would be calculated as Rs 1,850 to Rs 2,250 since cost of flooring and internal material use are being added while calculating the price. In cities like Cuttack, Sambalpur, Jharsuguda and Berhampur the per sqft price is far lower.
While calculating income tax of builders, the benchmark value is deemed to have been earned by them even if the actual sale cost is lower. "We will end up paying extra income tax for income we won't make," said Umesh Pattnaik, president, Confederation of Real Estate Developers' Association of India, Odisha chapter. Pattnaik said the government had increased the benchmark valuation though the actual cost of houses had either remained stagnant or gone down in the past two years.