Calcutta, Feb. 27: The government has decided to lower stamp duty by 1 per cent to 6 per cent for properties costing up to Rs 40 lakh.

'At present, 1 per cent additional stamp duty is charged on properties whose market value exceeds Rs 30 lakh. I propose to raise the threshold limit to Rs 40 lakh with immediate effect. As a result, property owners will have to pay a reduced stamp duty of 6 per cent instead of 7 per cent on properties with market value up to Rs 40 lakh,' Mitra said in his budget speech today.

Back-of-the-envelop calculations show that a buyer would be able to save around Rs 40,000 on stamp duty if the value of the property is up to Rs 40 lakh.

Industry observers said a large section of apartment buyers, particularly in suburban Calcutta, could benefit from the lower duty rates.

'This decision of the state government would generate demand for affordable houses and this is the segment where the real estate sector is now concentrating,' said Pradeep Sureka of the Sureka Group.

He added that buyers of property below Rs 50 lakh formed 40-50 per cent of the Bengal market.

'Demand for apartments in places such as Garia, BT Road and Howrah could go up,' Sureka added.

'We welcome the decision of the state government. This will motivate more people in the middle-income segment to buy apartments. The industry would also benefit from a greater demand for low-priced properties,' said H.V. Patodia, the former president of industry body Credai.

Prospective buyers, too, welcomed the move.

Madhurima Das of Nagerbazar said: 'I am planning to buy a new flat within Rs 35-40 lakh. The budget proposal to lower stamp duty is definitely good news for me.'

The move comes at a time finance minister Mitra has been able to garner only a modest 5 per cent growth in stamp duty and registration fees estimated for 2014-15 over the previous year, missing the target by a long shot.

The revised estimates of stamp duty and registration fees for 2014-15 was Rs 4,257.1 crore against a target of Rs 5399.05 crore. The earning of the state government under the same head was Rs 4053.06 crore in 2013-14. In 2015-16, the government is eyeing an 8 per cent growth in stamp duty and registration fee collection at Rs 4597.67 crore.

The state government had over the past 13 months made several policy tweaks in the real estate sector. In January last year, the circle rates were revised.

Mitra had in his last budget raised the ceiling limit of 6 per cent stamp duty on properties with market value of Rs 30 lakh from Rs 25 lakh.