Maharashtra mulls minimum 5% rise in ready recknor rates from April 1

May further dampen the property sales in the current sluggish realty market

The BJP-led government in Maharashtra proposes 5% increase ready recknor (RR) rates from April 1 for 2017-18. A revenue department officer, who did not want to be named, told Business Standard,'' The government has received representations demanding no hefty rise in RR rates citing the slump in the realty sector. The issue was discussed on Wednesday at the meeting chaired by chief minister Devendra Fadnavis. RR is primarily used to calculate market value of flats for the Stamp Duty and Registration charges which are major source of revenue for the state government after sales tax and value added tax. Based on the revised RR rates the property buyers would also have to pay higher value added tax, service tax and 50 per cent increased stamp duty.Therefore, the government mulls minimum rise of 5% in RR rates for 2017-18.''

The officer informed that RR is an annual statement of rates on which the stamp duty is collected from the property buyers. He recalled that RR there was 27% rise in RR rates in 2013 and 22% in 2014. However, the government in December 2015 had deferred the revision in RR rates to April 1 instead of the usual practice of revising it from January every year. Subsequently, the government had hiked RR rates for Mumbai and rest of Maharashtra by average 7-8% for 2016-17.

Knight Frank India executive director Gulam Zia opined that during a downturn high RR values give a prospective buyer one more reason to stay away from the market. ''While RR values only reflect market realities, at times it is only reasonable to read the realities and go for a cut instead of a consistent increase every year. Sellers tend to take the RR value as cast in stone but lack of interest at that price only affirms the unwillingness of a buyer to bite the bullet,'' he said.

Further, the government's move to effect minimum hike in RR rates comes when it has revised estimate of stamps and registration duty to Rs 20,000 crore from the budget estimate of Rs 23,548 crore for 2016-17. ''The fall in stamps and registration duty, which constitutes 16.2% of the state's own tax revenue, was due to ongoing sluggish realty market and the Rs 1,000 crore decrease in the collection after the demonetization,'' he noted.