Here’s something to cheer about in the middle of the economic gloom. The state government is set to lower the ready reckoner rates, which have remained unchanged in Maharashtra for the past two fiscals. The move will lead to reduction of stamp duty on property purchase and act as a lifesaving jab to the real estate sector in the state.
The ready reckoner rates are fair value price for a property set by the state government, where builders have the freedom to charge a premium over and above such rates.
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Every locality has its own ready reckoner rate, as it is based on property transactions in that locality over 12 months, based on which the stamp duty is calculated. Maharashtra charges 5% stamp duty on actual sale price or ready reckoner rate, whichever is higher.
For instance, if you are purchasing a property for Rs 1 crore but the ready reckoner rate in the locality for a similar sized property is Rs 1.2 crore, you must pay the stamp duty on Rs 1.2 crore.
Lowering of the ready reckoner rates is a huge respite for the builders too, who have been demanded such a reduction for several years now. The dozens of premiums which builders are required to pay the state government and the municipal authorities are linked to ready reckoner rates.
An official from the Revenue Department said that the government was preparing the revised ready reckoner rates for fiscal 2020-21. “Going by the trends in the property markets, the rates will be rationalised to meet the current market realities,” he said.
How Mumbaikars will benefit
In several areas across Mumbai, the ready reckoner rates are higher than the actual price. Ritesh Mehta, head (West India residential), JLL, gave an example of Walkeshwar where the ready reckoner rate is Rs 75,000 on the built-up area while the market rate is Rs 65,000. “Buyers in Walkeshwar are paying stamp duty on the ready reckoner rate which is an unusual scenario. It impacts the buyers positively if there is very little difference between the ready reckoner rate and the market rate,” Mehta said.
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The industry experts said that a correction in the ready reckoner rates was much-needed, considering the dismalness in Maharashtra’s real estate industry. In 2019, the number of properties registered across the state fell to 8.1 lakh compared to 9.45 lakh in 2018. This resulted in the government earning Rs 783 crore less from property registrations last year, when it collected Rs 12,409 crore, compared to Rs 13,192 crore it earned in 2018.
Last month, international property consultancy Knight Frank released a report saying Mumbai registered a 3% degrowth in the real estate price appreciation index in 2019.
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Revenue Minister Balasaheb Thorat confirmed a “review” of the ready reckoner rates was on but declined further comment. Nayan Shah, president, CREDAI-MCHI, said that revision of ready reckoner rates from time to time help both buyers as well as developers. “The prices of land as well as flats have been reducing, but in most places the ready reckoner rates are higher than the market rates. A correction is essential to bring about parity. The stamp duty should be paid on market rates, and not the ready reckoner rates,” he said.
(Source: Mumbai Mirror)
