Salary damper for govt staff

Pranesh Sarkar, TT, Calcutta, Feb. 10: Calcutta, Feb. 10: The cost of owning a property will come down in Bengal as the state government has proposed to reduce stamp duty on agreement for sale and registration fee.

Finance minister Amit Mitra today proposed in the budget to bring down the stamp levy to 2 per cent from the prevalent 6-7 per cent and registration fee to 1 per cent from 1.1 per cent. He also offered a 20 per cent discount on the registration fee in certain cases.

The move is aimed at encouraging compliance as many buyers do not register their property to avoid paying the stamp duty and registration fee. As a result, the state loses out on revenue.

"This is a win-win-win for the consumer, developer and the government. The buyer is encouraged to book a property because the initial cost goes down. This helps in rejuvenating the sagging real estate market which has been hit by demonetisation. If more buyers are encouraged to register their property, the state revenue will go up," Mitra explained to The Telegraph.

The proposal will come into effect once the finance bill is passed in the Assembly later this month.

Usually, a buyer pays around 15 per cent of the property value while booking a flat. But if the buyer wants to register the agreement for sale, he is asked to pay a stamp duty calculated on the entire value of the property. This had been preventing many from registering the document.

When a buyer books a flat in an under-construction property with a home loan, the mortgage lenders insist on the registration of the sale agreement as no unregistered document is admissible in court under the Evidence Act.

But while the home loan companies insist on registration, they usually do not fund the cost of paying the stamp duty that the buyer has to arrange in addition to the down payment.

According to the proposal tabled today, a buyer will need to pay only 2 per cent of the IGR value of the property (value decided by the inspector-general of registrar) while booking a flat and pay the rest if the deed of conveyance is registered within four years.

Bengal finance minister Amit Mitra's budget proposals for 2017-18 could prove to be a disappointment for about 8 lakh state government employees and aided institutions like schools as the allocation for salaries does not indicate any plans to revise the pay structure.

The allocation under the head "salary grant and wages" today witnessed "a modest hike" of Rs 2,843.53 crore, which officials in the finance department said would be insufficient for clearing the pending dearness allowance and implementing the revised pay structure as recommended by the 7th Pay Commission.

According to a rough estimate prepared by some finance department officials, the Bengal government would require around Rs 28,800 crore annually to clear the pending DA and introduce the new pay structure.

"The allocation under the salary grant and wages head clearly suggests no reasons to celebrate for state government employees in the 2017-18 financial year. It is a modest hike," a Nabanna official said.

According to the "Budget at a Glance"- a summary of budgetary allocations and proposed expenditures laid down in the Assembly today - a total of Rs 39,033.64 crore has been allocated for salaries and wages for 2017-18, compared to a sum of Rs 36,190.11 crore the last time.

"The allocation signals what the government can spend on salaries and wages of its permanent and contractual employees. As the head did not see a significant jump this year, it appears that not much will change for the state government employees in the new financial year," the official said.

Sources said the allocation for salaries and wages was all the more significant this year as the state government employees had been expecting a revised pay structure as recommended by the 7th Pay Commission.

The Centre and a number of states have implemented the recommendations of the new pay commission.

Bengal government employees currently get 46 per cent less DA than their counterparts at the Centre.

The rough estimate by the finance department officials said a total of Rs 13,800 crore was required to clear the pending DA of state government employees. The estimate said another Rs 15,000 crore was required to implement the new pay recommendations.

"With only a hike of Rs 2,843.53 crore for salaries and wages, the state government employees can expect only an instalment of the DA, which will widen the gap between the state and central government employees further. The Centre announces two instalments of DA in each financial year," said another official.

The sources pointed out that though allocation under any head could be augmented anytime during the financial year, the possibility seemed grim for the Bengal government.

"Next year, we have to spend around Rs 47,000 crore to repay past loans. A sum of about Rs 40,000 crore would have to be borrowed from the market to meet the income-expenditure mismatch. The state cannot allot huge funds for salaries and wages, at least not anytime soon," said a finance department official.