Kerala Budget 2019-2020

The Finance Minister of Kerala Dr Thomas Isaac has presented the Kerala state budget for the year 2019-20 in the Legislative Assembly on the 31st of January 2019. Let’s have a look at how it will impact land transactions and residential construction.

Kerala budget 2019-20 Impact on real estate and residential constructions

Increase in Fair value of Land

The Kerala Budget 2019-20 also proposes a 10% increase in the fair value of land. This will automatically imply a 10% hike in the stamp duty and registration fees of land transactions. In other words for a registering a property that has a fair value of Rs 5,00,000/- you will have to shell out an additional Rs 5000/- on stamp duty and registration fees.

Hike in Luxury tax for residential buildings

As far as residential constructions are concerned, there is a proposed increase in luxury tax for buildings whose plinth area is greater than 3000 sqft. As of today, all residential constructions greater than 3000 sqft constructed after 1st April 1999 are levied a luxury tax of flat Rs 4000/-. This would apply to modifications and additions made to buildings constructed before 1st April 1999 and whose total plinth area exceeds 3000 sqft.

However going forward, the Government proposes to introduce multiple slabs of taxation. According to this, large residential constructions can be taxed upto Rs 10,000/- The different slabs are as follows.

Plinth Area Luxury Tax till 2019 April Modified Luxury Tax
3000 -5000 sqft Rs. 4,000/- Rs. 4,000/-
5001 -7500 sqft Rs. 4,000/- Rs. 6,000/-
7501 -10000 sqft Rs. 4,000/- Rs. 8,000/-
>10000 sqft Rs. 4,000/- Rs. 10,000/-

This is a one time tax and would be levied on the plinth area specified in the building completion certificate approved by the local self governing bodies. The tax will be applicable also in the case of apartments where two apartments are combined to form a larger one.

Building construction to be dearer

The price of cement, ceramic tiles, plywood, granite, marble and paint will shoot up, thereby increasing your building construction costs.

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