Karnataka Doubles Property Registration Fee to 2% Amid Revenue Shortfalls

The Karnataka government has doubled the registration fee for property transactions from 1% to 2%, effective August 31. This move aims to address the department's revenue shortfall, despite already being one of the lowest among neighboring states in South India. Builders have criticized the decision, citing the e-Khata mandate as a bottleneck and arguing that doubling the registration fee is not the solution to the revenue issue.

The Karnataka government has doubled the registration fee for property transactions from 1% to 2%, effective August 31, 2025. This move aims to address the department's revenue shortfall, despite the state already having one of the lowest registration fees among neighboring states in South India. The increase in registration fees has sparked criticism from builders who argue that the e-Khata mandate is a more pressing issue and that doubling the registration fee is not the solution to the revenue problem.

The registration fee is a fixed charge of 1% of the property value, covering administrative costs, record maintenance, and issuance of registration certificates. The new fee structure will see the fee rise to 2% for all property transactions, regardless of the property's value. This decision is part of the government's broader strategy to boost revenue, particularly in the face of potential GST restructuring that could lead to significant revenue losses for states [1].

Builders and real estate professionals have expressed concern over the impact of the fee hike on property prices and the overall market. They argue that the e-Khata mandate, which requires digital verification of property ownership, has created bottlenecks and delays in property registration. According to them, addressing these issues would be more effective in increasing revenue than simply raising the registration fee.

The government's move comes at a time when several opposition-ruled states are seeking compensation over potential revenue losses from the Centre's GST restructuring plan. These states anticipate losses of Rs 1.5-2 lakh crore and have proposed an additional duty on sin and luxury goods to balance the revenue loss [1].

The new registration fee structure in Karnataka will likely increase the cost of property transactions, potentially affecting both buyers and sellers. However, the government maintains that the revenue generated will be used to improve public services and infrastructure, ultimately benefiting the state's economy.

References:
[1] https://economictimes.indiatimes.com/news/politics-and-nation/opposition-states-seek-compensation-over-gst-rejig-flag-rs-2-lakh-crore-revenue-risk/articleshow/123581199.cms