Ahmedabad realty business crosses Rs25,000 crore, razes slump

If the revenue collected by the state government as stamp duty on real estate transactions this fiscal is any indication, Ahmedabad realty has come out of recession. Figures for revenue collected as stamp duty indicate that, between April 1, 2009 and March 31, 2010, properties worth Rs25,000 crore were sold in Ahmedabad.

Till February-end this fiscal, the state government had collected around Rs780 crore as stamp duty. The government is likely to collect an additional Rs100 crore by March 31. The Gujarat government levies 5.9% stamp duty on property transactions. Ahmedabad district alone is expected to generate revenue of Rs880 crore from stamp duty this financial year.

It is estimated that, in 2009-10, properties worth around Rs15,000 crore were sold in the city on paper (i.e., officially). If Rs880 crore is collected as revenue when the stamp duty is 5.9%, then it follows that property worth nearly Rs15,000 crore (Rs14915.25 crore to be exact) was sold.

"The state stamp and registration department has collected Rs780 crore in the current fiscal (till February 2010) and is likely to collect another Rs100 crore by March-end," said a source in the Gujarat government. "The total revenue earned through stamp duty would then come to Rs880 crore."

The source added that, by the end of March this year, property worth around Rs14660 crore would have been traded in the city.
However, as sources in the city's realty sector were quick to point out, stamp duty is collected only on the white money involved in property deals. "A lot of black money changes hands in real estate deals in Ahmedabad," a source said. "No stamp duty is paid for this money. In fact, black money comprises around 40% of the total transaction in realty deals."

If this is true, properties that are officially shown to be worth Rs15,000 crore are actually worth around Rs25,000 crore.

Another government source said that compared to the previous year, a nearly 45% increase in property deals is expected this year. "In 2008-09, the state government collected Rs613 crore as stamp duty," the source said. "This is expected to rise by around 45% this year." The source added that, last year, property worth around Rs10,000 crore was sold.

Incidentally, properties purchased in Ahmedabad district alone comprise around 38% of the total property deals in the state. "Till February this year, the state stamp and registration department had collected Rs2,080 crore," sources said. "Out of this, around 38% came from Ahmedabad district alone."

Source: DnaIndia