The Maha Vikas Aghadi Government, in a bid to provide relief to the ailing realty sector, has reduced ready reckoner (RR) rates by 0.6 per cent in Mumbai but in the state, it has risen by 1.74 per cent on average. In rural areas, RR rates have increased on an average by 2.81 per cent, in influence areas by 1.89 per cent, in municipality and nagar panchayats by 1.29 per cent and in municipal corporation limits by 1.02 per cent. The revision in RR rates will come into effect from September 12. The decision on Friday came after the state government's reduction of stamp duty from September on agreements for sale.
The Free Press Journal broke the story of the government’s move to revise RR rates and cut stamp duty in its August 19 edition. RR rates are the fare rates of immovable property, on the basis of which market value is calculated, whereas stamp duty is charged on the type of instrument.
The state government’s decision has disappointed the realty sector.
ANAROCK Property Consultants Chairman Anuj Puri said that increasing the RR rates after reducing the stamp duty in most areas of Maharashtra, while Mumbai seeing a marginal decrease came as a surprise, to say the least. ‘
‘‘Bringing down the RR rate considerably at this juncture was something that everybody was looking forward to, as it would have given some room to developers to bring down the prices. Today, in most micro-markets, the RR rate is almost equal to the ongoing sale price and buyers, as well as sellers, have to pay tax if sales are below the RR rate. This has been the limitation cited by developers in bringing down prices and an increase in RR rates further limits the room for them to bring down the price, while too marginal a reduction makes no difference at all,’’ he noted.
On the other hand, NAREDCO President Dr Niranjan Hiranandani was surprised by the state government’s decision to enhance RR rates, especially when the industry was expecting a reduction. ‘‘Income-tax provisions mean a developer cannot sell at a price point lower than the RR rate, as it translates into tax burden for both buyer and seller. In this situation, the expectation was that the state government would reduce the RR rates; instead, it has chosen to increase the same. New projects will be impacted too, as the RR value will govern all levies, duties and taxes payable by a developer. One hopes the authorities will consider this and take necessary steps,’’ he opined.
However, Nahar Group Vice President Manju Nahar said the downward revision of the RR rates for Mumbai was a positive development, as the state government had provided another relief after announcing the stamp duty cut last month. But she said, ‘‘Upward revision of RR rates for the rest of Maharashtra (excluding Mumbai) is not something we were expecting. The RR is something which impacts both homebuyers as well as developers, a hike in RR rates for other regions in Maharashtra will dampen the sentiment.’’