Realty players have slammed the Maharashtra government for an increase in ready recknor (RR) rates — effective from on Sunday — ranging between five per cent and 30 per cent in Mumbai and rest of Maharashtra. The revision, during the current slowdown, would not help bring down the realty prices as desired by the government, they claim.
RR rates are used to calculate the market value of apartments for stamp duty and registration charges.
The government has amended the RR of Mumbai, whereby reservation land for the public purpose would be valued at 80 per cent of the RR rates. These lands are sold at a cheaper rates, as the land buyer gets only the TDR (transfer of development right) benefits. However, taking into consideration the prevailing TDR prices of Rs 2,000 per sq ft, realty players believe it will heavily impact the sale of such lands.
The Maharashtra Chamber of Housing Industry has questioned the government’s intent. “Why this increase of 10 to 30 per cent when customers are already burdened with service tax, VAT, labour cess and five per cent stamp duty?” asks its president, Paras Gundecha. “We had already discussed with the revenue minister not to revise RR rates at a time when the government had already received 30 per cent less stamp duty in 2011. Therefore, the rise in RR rates was unnecessary,” he told Business Standard. “The government wants housing to be made affordable and every one should get a house; then why this injustice?”
However, a government official justified the revision in the RR rates. “It has been modest, considering the present economic conditions,” he said.
Sunil Mantri Realty Ltd said the RR rates were far away from reality. “It has come as quite a shocking and surprising move,” said its chairman, Sunil Mantri. “The government deficit is filled up by an abrupt increase in the prices referred in the RR. All the stakeholders including developers and consumers will now have to fight unitedly against the government.”
The capital-based property value system will put additional pressure in terms of taxes while renting out property, even as developers will have to shell out more money while paying premium/charges related with RR, according to Mantri. “The consumer, in spite of getting the property at the cheaper rate, will have to pay more stamp duty. It seems the government intention is to increase the revenue collection by raising RR rates without changing stamp duty slab which is currently a maximum of five per cent in Maharashtra.”
Mantri suggests the government needs to bring down the stamp duty rates to 2-3% from the present of 5 per cent. “This will result in a cut in the transaction coast as envisaged in the National Housing and Habitat Policy,” he adds.
Rajan Bandalkar, director of Raunak Group says the hike is uncalled for. “Why should developers be blamed for increasing rates, when the government is hiking the RR rates by 5 per cent to 30 per cent?” he says. “The government should have reduced the RR rates by 10 per cent. It would ultimately have benefitted the customer at large.”
