Notwithstanding the current economic slowdown, the Maharashtra government has increased ready recknor (RR) rates by an average 25% across the state. RR rates, which will be charged in different zones at 5%, 10%, 20% and 30%, comes into fom January 1. RR is an annual statement of rates on which the stamps and registration department collects the stamp duty from property purchasers.
The government's rise in RR rate was an average 18% from January 1, 2012.
State revenue minister Balasaheb Thorat told Business Standard “It has been the department’s efforts to match these rates with the prevailing market rates. However, the property buyers have to pay additional duties and taxes based on RR rates.” Thorat informed that during his three year tenure as the revenue minister the collection of stamps and registration, which is major tax after sales tax and VAT, has been increased.
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.
However, realty players have criticized the state government’s move saying that it would adversely impact the sector.
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Yomesh Rao, director, YMS Consultants. Rao at the outset claimed that the hike in RR rates was totally unwarranted during the sluggish market when there have been no major transactions. “The real estate development will be badly impacted as the premiums such as staircase exemption, fungible floor space index (FSI), open space deficiency and development charges payable to the Mumbai civic body will be telescopically increased as the rates of premium are derived from RR rates.”
Paras Gundecha, president, MCHI-CREDAI expressed surprise over the revision in the RR rates when there has been no rise in other costs. “RR revision has come at a time when the realty sector is struggling to survive during the current meltdown. It won’t be possible to achieve government’s much debated programme of affordable housing in such high RR rate regime," he said.
Moreover, Anand Gupta, honorary general secretary of Builders’ Association of India alleged that the state government was falsely blaming developers but the reality is that it is revising RR rates to earn more revenue for itself by applying artificial methodology. “The property transactions will certainly become dearer in the state,” he noted.
