Karnataka Considers 1% Stamp Duty Hike Amid Property Registration Revenue Shortfall
The Karnataka government is mulling a 1% increase in stamp duty to address a significant revenue shortfall from property registrations. This move could raise the total cost of property registration for buyers from 6.6% to 7.6%.
KarnatakaStamp DutyProperty RegistrationReal EstateRevenue ShortfallReal Estate NewsJun 24, 2025
The stamp duty was last revised in 2013. According to sources familiar with the matter, the Chief Minister has directed the finance, stamps, and registration departments to devise concrete measures to address the revenue shortfall.
At present, property purchasers in Karnataka are required to pay a 5% stamp duty calculated on the guidance value, which is the minimum property price set by the government. In addition, they incur a 1% registration charge, a 0.5% cess, and a 0.1% surcharge.
The shortfall in collections has raised concerns about a potential slowdown in the real estate sector, which could be contributing to the decline. The state had initially set a revenue target of ₹26,000 crore for the stamps and registration department for FY2024–25, but later revised it to ₹24,000 crore. Even with the reduced target, the department closed the fiscal year with only ₹22,500 crore, a report published in the Times of India said.
For the ongoing financial year, the target has been raised to ₹28,000 crore. To stay on course, the department needed to generate around ₹7,000 crore in the first quarter, which ends June 30. However, it has so far collected just ₹4,556 crore, reflecting a steep 35% shortfall, it said.
The proposal to increase stamp duty is aimed at bridging this gap and ensuring the department meets its financial targets. However, industry experts and real estate developers have expressed concerns that such a hike could further dampen buyer sentiment and exacerbate the slowdown in the property market.
The real estate sector in Karnataka, particularly in Bengaluru, has been facing several challenges, including the implementation of the E-khata system, which has led to a dip in property registrations. The E-khata system, designed to streamline property transactions and reduce fraud, has faced implementation issues, causing distress to buyers and developers alike.
The government's decision to consider a stamp duty hike comes at a crucial time when the real estate market is already under pressure. The move could have far-reaching implications for both buyers and sellers, potentially affecting the overall health of the sector.
In response to these challenges, the government is also exploring other measures to boost property registrations and revenue collection. These include improving the efficiency of the E-khata system, simplifying the registration process, and providing incentives for first-time homebuyers.
As the proposal to increase stamp duty is still under consideration, stakeholders from the real estate sector are closely monitoring developments and preparing to voice their concerns. The final decision on the stamp duty hike will likely be made after a comprehensive review of the potential impact on the market and the broader economy.
The Karnataka government's efforts to address the revenue shortfall and stabilize the real estate market are crucial for the state's economic growth and development. The coming months will be pivotal in determining the effectiveness of these measures and their impact on the property market.
Frequently Asked Questions
Why is the Karnataka government considering a 1% increase in stamp duty?
The Karnataka government is considering a 1% increase in stamp duty to address a significant revenue shortfall from property registrations. This move aims to bridge the gap and ensure the department meets its financial targets.
What is the current total cost of property registration in Karnataka?
Currently, the total cost of property registration in Karnataka is 6.6%, which includes a 5% stamp duty, a 1% registration charge, a 0.5% cess, and a 0.1% surcharge.
What are the potential implications of the stamp duty hike for the real estate market?
The stamp duty hike could further dampen buyer sentiment and exacerbate the slowdown in the property market. It may affect the overall health of the sector and potentially lead to a decrease in property transactions.
What other measures is the government considering to boost property registrations?
The government is exploring measures such as improving the efficiency of the E-khata system, simplifying the registration process, and providing incentives for first-time homebuyers to boost property registrations and revenue collection.
What challenges is the real estate sector in Karnataka facing?
The real estate sector in Karnataka, particularly in Bengaluru, is facing challenges such as the implementation of the E-khata system, which has led to a dip in property registrations and caused distress to buyers and developers.
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