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Realty players are considering approaching the Bombay High Court against the revision in ready reckoner (RR) rates across Maharashtra.
The BJP-led government has increased rates by 15-20% across Mumbai and about 40% in suburbs from 1 January, 2015. Similarly, in rest of Maharashtra, the average hike is 15% while maximum is up to 40% in cities and towns.
Hemant Naik-Navre, president, Pune Metro unit of Confederation of Real Estate Developers' Associations of India (CREDAI) told Business Standard, "The government has increased RR rates in an arbitrary and adhoc manner. The entire procedure lacks transparency. More importantly, the average 15% increase in RR and the subsequent rise in stamp duty, premium and other charges have further led to nearly 25% rise in valuation of flats and about 3 to 5% hike in flat prices. The home buyers will have to pay more. Besides, the realty sector is already passing through difficult times and it is not in a position to bear the RR rate hike."
Naik-Navre said CREDAI will appeal to the state government to reconsider the hike.
Simultaneously, CREDAI office bearers are also holding consultations with the legal experts about filing a petition in the High Court.
State revenue minister Eknath Khadse has said he has already received representation from a section of realty sector players in connection with revision in RR rates and the guidelines.
"I will soon hold a meeting in the presence of revenue department officials with the realty sector players to find a way out," he said.
RR is an annual statement of rates on which the stamps and registration department collects the stamp duty from property purchasers. Based on the revised RR rates, property buyers would have to pay higher value added tax, service tax and 50% increased stamp duty.
Naik-Navre explained that there are certain hidden clauses released in the RR guidelines, which also cause a spike in other rates.
"The compounding effect is quite high," he said, adding that the government didn't seek the view of the realty sector before raising rates. Besides, there is no mechanism whereby rates are relaxed or revised during the year, he added.
A Mumbai-based builder and developer, who did not want to be named, said they not only have to pay additional charges based on revised RR rates but it also attracts higher income tax and gift tax, especially on account of higher valuation of land and flat.
Lalit Kumar Jain, CREDAI's national president also shared Naik Navre's views, saying that the government's procedure to fix RR rates was not logical and therefore the government needs to reconsider the recent hike.
Vimal Shah, president, MCHI-CREDAI said the association will soon approach the government with a plea to reduce the RR rates.
However, a government official said the revision was necessary as the government expects to mobilize Rs 18,500-19,000 crore crore through stamps and registration duty by end of current fiscal. This is crucial when the government's deficit has increased to Rs 26,000 crore as on date from Rs 4,500 crore in March 2014.
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 rose to over Rs 15,000 crore by end of 2012-13 (25% rise) and further to Rs 18,500 crore in 2013-14 (18% increase), the official said.
