Rollback on rise in reckoner rates begins

Property buyers on wait and watch mode

Property buyers have adopted a wait-and-watch policy until the Maharashtra government rolls back the increase in ready reckoner (RR) rates for residential and commercial transactions to the tune of five - 30 per cent, effective from Wednesday.

“The state Cabinet, at its meeting on Thursday, was of the view that the increase in RR rates be reduced and accordingly, the necessary instructions have been given by Revenue Minister Balasaheb Thorat to the Department of Stamps and Registration. Till the revised rates are fixed and necessary guidelines issued, the department will not expect any substantial registration of deals,” a state revenue ministry official, who did not want to be identified, told Business Standard.

The official said the department might explore various options, including reduction of two-five per cent in average RR rates from the present 13 per cent or apply RR rates, which were effective during 2013, when the average rise was 18 per cent.

The official said there was one view within the department that the state’s revenue mobilisation might not be impacted adversely if RR rates are reduced, as it might increase registration of deals and thereby raise the  revenue.

The state Cabinet was unanimous about bringing down the RR rates, fearing a backlash in the coming Lok Sabha elections, especially in Mumbai, and parts of Maharashtra. The ruling Congress and Nationalist Congress Party ministers and legislators had protested against the rise in the RR rates, while the opposition had also blasted the government in this regard.

Further, various associations representing realty players had flayed the decision, saying the move would harm the industry in particular and the state in general.

Lalit Kumar Jain, chairman, Confederation of Real Estate Developers' Association of India said the rise in RR rates would harm the interest of the state’s revenue generation as property sales were falling already. For the developers, their capital cost would go up, which in turn would increase the sale price at a time when the inventory levels were piling up.

The RR rate is an annual statement of property rates based on which the stamps and registration department collects stamp duty from buyers. It is the basis for calculation of the market value of flats for stamp duty and registration charges. Following the hike, property buyers would have to shell out more in terms of higher value-added tax, service tax and stamp duty, leading to an overall price rise in the city which attracts the highest realty price in the country.