Maharashtra RR rate hike: Choose ongoing projects, women ownership helps

The Maharashtra government recently increased the ready reckoner (RR) rates across the state. The average rise was 

3.89 per cent, though some regions saw hikes as high as 10.17 per cent. 

How RR rate is revised 

The RR rate is the minimum value at which a property must be registered during a transaction. “It is set by the state government and serves as a reference for calculating stamp duty and registration charges. It ensures uniformity and transparency in property transactions, and acts as a safeguard against underreporting,” says Deepak Khandelwal, principal partner and chief sales officer, Square Yards. 

This rate is also known as the circle rate or guidance value in some states. “The valuations of actual registered transactions that have taken place in an area in the recent past are used to revise the RR rate,” says Sajid Mustafa Baig, vice-president (residential sales and marketing), Silverline Realty LLP. 

What the hike means 

In areas where market rates exceed RR rates, the revision will have limited impact. “In such areas, the stamp duty and registration charges would already be calculated based on market price,” says Khandelwal. 

There could be some impact on market sentiment. “A hike creates the perception that prices within the market are going up,” says Pradeep Mishra, founder, Homents. 

In some cases, property prices may move up. “Sellers may try to align the sales consideration with the new RR rates,” says Rupali Singhania, partner, Areete Consultants LLP. 

In locations where market rate is lower than the RR rate after revision, this step will raise costs. “If the difference between actual sales consideration and stamp duty value is more than 10 per cent, then stamp duty value will be deemed as the sales consideration,” says Singhania. 

In such areas, buyers’ acquisition cost will increase. 

Transparency may improve. “Higher RR rates, especially when coupled with stricter enforcement, push buyers and sellers to declare fairer transaction values,” says Khandelwal. 

High acquisition cost could deter some. “Some potential buyers may postpone purchases and stick to rented houses,” says Mishra. 

The hike may dampen speculative activity in such areas. “By decreasing the profit margin of speculators, it could reduce speculative activity in the short term,” says Mishra. 

Dealing with the hike 

Buyers have a few options. “They may choose to wait for more favourable market conditions or negotiate for better terms,” says Khandelwal. Investing in under-construction property is another option. “This will allow buyers to delay the immediate impact of the RR rate hike,” adds Khandelwal. 

Mishra recommends registering the property in a woman’s name, as several states levy lower stamp duty and registration charges on women. 

Buyers must make use of informed realtors. “They will be able to get you realistic prices instead of quoting inflated rates,” says Baig. 

As for sellers, they may witness a slowdown in demand “They must be patient as such a phase is likely to be temporary,” says Mishra. 

Sellers may have to pay a higher amount of tax. “In cases where the stamp duty value is more than 110 per cent of the actual sales consideration, the stamp duty value is considered as the sales consideration for computing capital gains. With increase in RR rates, the capital gains will increase in such cases,” says Singhania. 

Finally, avoid underreporting the transaction value. “It can attract legal action under increasingly strict regulatory frameworks,” says Khandelwal. Consult tax professionals to ensure compliance and optimise transaction structures.

House sale: How capital gain is taxed

 

*  Gain or loss on sale of house property is taxable under the head capital gains

  *  If the house is sold after 24 months, long-term capital gain (LTCG) or loss arises

  *  If it is sold earlier, short-term capital gain (STCG) or loss arises

  *  In the case of property acquired before July 23, 2024, LTCG is taxable at lower of 12.5 per cent without indexation or 20 per cent with indexation; STCG is taxed at applicable income-tax slab rates

  *  For property acquired on or after July 23, 2024, LTCG is taxed at a flat rate of 12.5 per cent without indexation; STCG is taxed at applicable income-tax slab rates