Prospects for the ailing realty market just went from bleak house to bright. A bonanza is in store for property buyers also as the Maharashtra government has proposed to rationalise ready reckoner (RR) rates and a 2 per cent cut in stamp duty up to March 31, 2021, in Mumbai. The revenue department has moved the proposal in a bid to boost the revival of the cash-strapped realty sector and and prop up buyer sentiment.
The proposal will be in line with the income tax department's decision to allow 10% lower than RR valuation of the property. Currently, the state government has not changed RR rates from April but allowed recovery of RR rates applicable for 2019-20 because of the Covid-19 crisis.
The revenue department officer currently involved in this exercise, told The Free Press Journal, ''The proposal will be put up before the state cabinet at its next meeting. The objective is to reduce RR rates in zones where they are higher while in the zones where they are lower, they will be brought on a par with the market rates. RR rates are the fare rates of immovable property, on the basis of which market value is calculated and stamp duty is charged on the type of instrument.'' He informed that residential apartments or flats in Mumbai have a ready reckoner rate ranging between Rs. 42,000 and Rs 8,61,000 for every sq mt. However, he explained that the rates vary in the 19 zones and 221 subzones of Greater Mumbai.
''For example, RR rates for flats/apartments in Worli is Rs 1,72,300-5,23,600 per sq mt, in Bandra east, it is Rs 1,11,400-2,89,900 per sq mt while in Goregaon east, it is Rs 51,000-2,20,500 per sq mt. However, there are very few takers because of the economic downturn. With the rationalisation of RR rates, the government expects reduction in cost, drop in sale price and also, a fall in the stamp duty,'' said the officer.
As far as the 2 per cent cut in stamp duty is concerned, the government hopes to encourage property transactions with this move. Already Deputy Chief Minister Ajit Pawar, who is the finance minister had introduced a 1% stamp duty cut in Mumbai in the annual budget for 2020-21. ''This means, in Mumbai there is likely to be 3 per cent stamp duty imposed on property transactions, while in the rest of Maharashtra also, it will be 3 per cent till March 31, 2021. The cabinet will take a final call,'' the officer said.
Anand Gupta, chairperson, housing and RERA committee of Builders Association of India, said the state government should introduce a flat 25 per cent cut in the present RR rates in Mumbai and in the rest of Maharashtra. This will, in the near future, rationalise the real market value of land, residential flats and commercial establishments. This will ultimately lead to fair demand from the customers.
''A two per cent cut in stamp duty will psychologically make customers make a deal as it will be applicable only to transactions until March 31, 2021. This is expected to boost the sale of properties in the market. Both these decisions will make the rate competitive for property transactions. Reduction in RR will also cut the cost of premium for FSI, fungible FSI and all development charges. In total, this is likely to reduce sale price and improve demand," he noted.