Maharashtra mulls hike in ready-reckoner rates in Greater Mumbai from Jan 1

Maharashtra government proposes to increase ready recknor (RR) rates in the range of 5 per cent and 40 per cent in Greater Mumbai and rest of state from January 1. This is despite the ongoing slow down as the government estimates the increasing number of registration will help cross the stamps and registration tax Rs 15,000 crore mark by end of 2012-13.

The government has increased RR rates by an average 18 per cent in Greater Mumbai from January 1, 2012. RR is an annual statement of rates on which the stamps and registration department collects the stamp duty from property purchasers.

Realty players estimate that any rise in RR would ultimately lead to hike in the property prices as builders would have to pay higher premium to civic bodies, the state Maharashtra Housing & Area Development Authority (MHADA) and also due to the payment of 1 per cent VAT and service tax. In view of government's proposal to abolish Octori to be replaced by local body tax by 1 per cent on every transaction of immovable property. This would also make the property transactions dearer.

Revenue department’s data for 2010, 2011 and 2012 shows that of the total tax collected by stamps and registration department as high as 65 per cent alone comes from registration of immovable properties. The government had not revised RR rates in 2008-09 following the slow down in 2008. During 2008-09, the income from stamp duty was Rs 8,384 crore which was increased to Rs 10,901 crore in 2009-10 (30 per cent rise), Rs 13,411 crore in 2010-11 (23 per cent increase) and Rs 14,800 crore in 2011-12 (10 per cent).

“The government has received representations from various sections not to revise the RR rates from the new year. But the government needs the revenue and it has attempted to match the RR rates with the market rates. The property buyers are burdened due to additional taxes and levies charged by civic body and other agencies,” state Revenue Minister Balasaheb Thorat told Business Standard. He declined to divulge details about the exact increase in RR rates but said the department was in the midst of working on them.

MCHI-CREDAI, a developers’ body, has appealed to the state government to slash the RR rates that form the basis of stamp duty.  “As it is the RR rates are very high and are not commensurate with the real market scenario. The real estate market sentiment over all is not very encouraging with the cost of inputs — from funding to materials and labour — increasing by the day. It is therefore imperative for the government to create a congenial atmosphere to encourage home seekers to buy and developers to do their business,” Paras Gundecha, president, MCHI-CREDAI, said.

The government's move comes at a time when realty players and legislators have launched an aggressive campaign against any rise in the duty as they fear that it would scuttle the government's objective to implement an affordable housing policy in the state.