KATHMANDU, Dec 10: The government revenue from land transactions have fallen 20% in the first four months of the current fiscal year 2019/20 compared to the corresponding period of the last fiscal year 2018/19.
The recent restriction imposed by the government on land plotting has led to the decline of the land transactions. With the fall in the transactions of land, the revenue for the government has also been affected.
According to the Department of Land Management and Archive, the government collected a total of Rs 5.72 billion in revenue from land transactions in the first four months of the current fiscal year 2019/20, down from 7.15 billion in the corresponding period of the last fiscal year.
Though the government first decided to ban plotting of arable land in August 2017, it later relaxed the ban amid concerns that such decision caused practical problem for the land plotting. On January 11, the government decided to allow land plotting for the purpose of family partition of property and implementation of the court's verdict.
The capital gains tax collected upon the purchase of land and houses has also gone down to Rs 1.72 billion from Rs 1.98 billion.
The government's revenue from taxes on land transactions dipped owing to the restriction on the large-scale land plotting, according to land and housing developers.
Khubiram Acharya, a property developer, told Republica that transactions of land and housings have remained stagnant following the government's restriction on plotting. Most of the transactions are of the lands which were plotted before the government's restriction. “The government took this decision to control large-scale plotting. But, it's the general public who are facing the problem,” said Acharya.
Some analysts see tightening of bank loans toward real estate business as a reason behind the slump in the land and housing deals. But, Acharya believes the reason of low exposure of banks toward this sector just as a speculation. “How could bank finance land purchase when there is no land for the deal?” he says.
However, the real estate business in Kathmandu is somehow positive. According to the data, the collection of revenue from eight land offices in Kathmandu valley in first four months of the current fiscal year is 30% higher than the corresponding period of the last fiscal year.
In the review period, the revenue collection of Kathmandu from land transactions in first four months of the current fiscal year stood at Rs 3.24 billion, up from Rs 2.52 billion in the corresponding period of the last fiscal year. The capital gains tax collection grew by 15% to Rs 1.81 billion.
While the supply of land and house has fallen due to the government restriction, land developers say the demand is strong.
“Currently, the transactions are limited to small plots. There are no big plots,” said Nirmal Raj Poudel of Highline Propertry. “The demands of land plot have not gone down.But, people have to buy lands at high price. Big real estate firms have invested billions of rupees. But the business of real estate is at the verge of closure,” he added.