Reduced mill land value to give relief on stamp duty

Buckling under pressure from mill land developers, the Maharashtra government is considering reducing the value of textile mill lands in its Stamp Duty Ready Reckoner (a manual of government-determined market value of land for the calculation of stamp duties) by 10-20 per cent in a couple of weeks. The decision will have a prospective effect.

The proposed move will reduce the incidence of stamp duty for those planning to buy apartments, shops and office space on the mill lands undergoing development and will result in lower prices.

From January 1, 2007, the state government had increased the market value of all mill lands, which were sold off to private developers by inviting open tenders, by 5 to 500 per cent in its ready reckoner, increasing the burden of stamp duty on the buyers.

The stamp duty is 5 per cent, except in residential projects. In residential projects, it is Rs 7,600 up to Rs 5 lakh and 5 per cent above Rs 5 lakh.

The land value for the calculation of stamp duty is judged on the basis of land rate, development costs plus 25 per cent profit (in residential projects) or 50-100 per cent (in case of commercial projects).

After receiving complaints from mill land developers, the state principal secretary held a meeting on May 16 with town planning officials on reducing the land value in the Stamp Duty Ready Reckoner.

It was decided in the meeting to issue a corrigendum to the existing Ready Reckoner. The reduction would vary depending on each mill land, said industry sources.

Explaining the rationale behind the reduction, sources said: "Property tax and other levies are determined based on the market value mentioned in the reckoner. The earlier hike in land values was so steep that the mill land developers lobbied with the government to bring them to reasonable levels."

The State Town Planning Department will prepare a draft and the Inspector General of Registration and Stamps (IGRS) will issue a corrigendum to the Ready Reckoner.

Indiabulls Real Estate is developing a technopark complex with two towers in Jupiter Mills and office space in Elphinstone Mills in Parel, DLF and Akruti Nirman are developing a cinema complex and a mall in the city's largest mill"" Mumbai Mills "" in Elphinstone, Parel, while Manohar Joshi's Kohinoor CTN Developers and Raj Thackeray's Matoshree Realtors are developing a residential complex-cum-hotel in Kohinoor Mills in Dadar.

With the changes which came into effect from January 1, 2007, Kohinoor Mill No 3 had witnessed a 520 per cent increase to Rs 1,81,500 per square metre.

The rates rose by 477 per cent for residential purposes at Rs 2,90,000 per square metre. The market value for office space went up by 553 per cent at Rs 3,62,500 while the prices for shops had gone up by 517 per cent and were pegged at around Rs 4,35,000 per square meter.

The prices of land, residential, shop and office premises at Elphinstone Mills increased from anywhere between 227 and 364 per cent and the prices rose between Rs 1,40, 600 and Rs 3,37,500 per square metre.

For Mumbai Mills, Madhusudan Mills and Bharat Mills, the increase is between 178 and 329 per cent and prices were revised up to Rs 1,04,500 to Rs 2,50,000 per square metre.

In Jupiter Mills, prices went up 50-110 per cent. But in the case of other mills including Jam Mills, United Mill No 1, Finlay Mills and Kohinoor Mill No 1, the price rise was 5 to 25 per cent.