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The Maharashtra government is mulling a 10 to 25 per cent increase in the ready-reckoner (RR) rates for residential and commercial properties in Mumbai and the rest of Maharashtra from January 1, 2014. The revenue department has convened a meeting on Monday to explore various options in this regard.
RR is an annual statement of rates on which the stamps and registration department collects stamp duty from property purchasers. The government intends to mobilise Rs 20,000 crore during 2013-14 through stamps and registration. From January 1, 2013, the state government had hiked RR rates in the city by 5-30 per cent.
During 2008-09, the income from stamp duty was Rs 8,384 crore, raised to Rs 10,901 crore in 2009-10 (30 per cent rise), Rs 13,411 crore in 2010-11 (23 per cent rise) and Rs 14,800 crore in 2011-12 (10 per cent). The collection rose to Rs 15,000 crore by end 2012-13.
The realty sector and the ruling and opposition parties have strongly opposed any rise in RR rates due to the current slowdown and deteriorating financial condition of the sector. Property buyers would have to shell out more as based on the revised RR rates, they would also have to pay higher value added tax, service tax and 50 per cent increased stamp duty.
Political parties fear a rise in RR would make it difficult for them to garner votes in the ensuing Lok Sabha and Assembly elections slated for 2014. The Congress and Nationalist Congress Party have been ruling the state since 1999, while the Shiv Sena-Bharatiya Janata Party are in power in the Mumbai civic body since the last 18 years.
Sunil Mantri, president, National Real Estate Development Council, told Business Standard: “In the last few years, the government has made RR the biggest cash cow, with a rise in its rates every year without any justification. Any increase in RR rates is totally unjustified, especially when the realty sector is passing through a tough time. In fact, my suggestion is that the government should reduce the RR rates and also cut the stamp duty to two-three per cent from the present level of five per cent. This will ultimately boost property transactions.”
Yomesh Rao, director, YMS Consultants, fears an increase in RR would lead to a rise in the premium cost a realty player has to pay to the municipal corporation of Greater Mumbai. Currently, it is Rs 4,000 per sq ft. Further, the rise in premium cost would cause the developer to increase construction cost and the end result will be a rise in property prices for the buyer.
Amin Patel, Congress legislator from south Mumbai said, “I have already written a letter to Chief Minister Prithviraj Chavan with a plea that the government should not hike RR rates in the current prevailing economic condition. Besides, I have held talks with Revenue Minister Balasaheb Thorat. The chief minister has agreed to convene a meeting in this regard before the new rates become applicable from January 1 next year.” However, he said that he, along with other party members would strongly oppose any rise in RR as it ultimately would have a negative impact on property buyers in Mumbai.
Patel's views were shared by another Congress legislator from north west Mumbai, Baba Siddiqui, who hoped that the government would not increase RR rates ahead of ensuing elections.
Vinod Tawade, leader of the opposition in the Maharashtra Legislative Council made a strong pitch for a status quo in the RR rates from January 1 next year. He opposed any increase, saying it would further impact the realty sector adversely.