Maharashtra to review stamp duty fixation process

Realty players says move to benefit developers and consumers

The government of Maharashtra has proposed to change the method of fixing ready reckoner (RR) rates in the state.

RR is an annual statement of the rates on which the stamps and registration department collects stamp duty from property buyers. RR rates come into effect from January 1 every year in the state. The government had increased these rates by an average of 25 per cent across the state from January 1 this year.

Revenue Minister Balasaheb Thorat told Business Standard: “I have received representations from various sections to amend the process to determine RR rates. Some say the RR rates are low when compared to the market rates, while there is the other view that RR rates are quite high, which further lead to a rise in property prices.” He said a departmental panel will look into the issue and suggest a new process, which could take effect from next year.

The revenue department’s data shows of the total tax collected by the stamps and registration department, 65 per cent comes from registration of immovable property. The government had not revised RR rates in 2008-09 following the slowdown of 2008. During 2008-09, the income from stamp duty was Rs 384 crore. It rose to Rs 901 crore in 2009-10, to Rs 411 crore in 2010-11 and Rs 800 crore in 2011-12. The tax collection is expected to cross Rs 1,500 crore by the end of 2012-13.

Said Paras Gundecha, president MCHI-Credai, a representative body of realty entities in the state: “MCHI-Credai welcomes the government's move to bring in transparency in the rates. We hope the new system is more realistic than the ad hoc system. ”

Said Kruti Jain, director, Kumar Urban Development Ltd: “This is a positive step. The real estate sector has been fighting for transparency in RR rates since a long time. This move will help build a healthy environment among consumers and developers, provided it is done in a realistic way. Transparency should be implemented as soon as possible.”

 

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% 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% rise), Rs 13,411 crore in 2010-11 (23% increase) and Rs 14,800 crore in 2011-12 (10%). The tax collection is expected to cross Rs 15,000 crore by end of 2012-13.