MUMBAI: An unusually high ready reckoner (RR) fixed by the stamp duty office on over century-old properties within Mumbai’s oldest religious and heritage sites, the landmark Mahalaxmi temple complex, has stumped its residents.
The complex, comprising 50 properties housing over 1,500 residents, is around the ancient Mahalaxmi, Trambakeshwar and Dhakleshwar temples. During Navratri and Diwali, the annual Mahalaxmi fair attracts lakhs of tourists and devotees. But local residents represented by the Mahalaxmi Parisar Vikas Sangh are a harried lot. The RR rates in the precinct are three to four times the actual saleable value of the property. The revised rate introduced last month is 10% more than the one fixed in 2013.
“The RR rates are Rs 60,000 a sq ft on carpet area, while the market rate for a new construction, if any, is not more than Rs 30,000 a sq ft,” said a resident.
The old buildings, including chawls, are worse off as their market rate is Rs 18,000-21,000 a sq ft. Their main grouse is that their properties are made to be on par with other buildings on Bhulabhai Desai Road (Warden Road), one of the priciest residential areas in South Mumbai. During festivals, vehicles are restricted, making entry to and exit from the temple compound difficult for residents.
“These narrow roads have a direct impact on real estate prices in the compound,” say residents.
The Income Tax Act makes it clear that capital gains tax has to be paid according to the RR value, even if someone sells an asset at a lower price. So a seller in this complex would have to pay tax at the RR rate of Rs 60,000 per sq ft even if he has sold his flat at the market rate of say Rs 30,000 per sq ft. Moreover, stamp duty would have to be paid with reference to the reckoner value even though the transaction price is less. “The seller stands to lose even if some of these old buildings enjoy a depreciation of 50%,” said the resident.
“The high RR rate creates a host of problems, including high stamp duty, income tax (capital gains) and high property taxes under the new capital value system,” said Prakash Raut representing the Sangh.
“An average citizen pays 5% stamp duty on a property transaction, but we pay 10-15%, and at times 20% of the sale price because of the disparity in pricing,” he added. For instance, a small tenement in a chawl here has a market price of Rs 25 lakh, but according to the RR rate its value is pegged at over Rs 74 lakh.
The stamp duty payment is calculated on Rs 74 lakh (around Rs 3.70 lakh, when it should be little over Rs 1 lakh based on market price).
The skewed RR rates have caused a lot of heartburn in the real estate industry. TOI had reported on January 21 how ready reckoner rates for Nariman Point have been fixed at Rs 43,000 a sq ft, when the prevailing market rate ranges between Rs 26,000 and Rs 30,000 a sq ft.
Mahalaxmi Complex is designated as a heritage precinct due to its architectural/archeology value, unique street scape and intrinsic quality of historic settlements dotted with traditional temple shrines. It has a unique ambience of vernacular domestic architecture and temple forms, with a picturesque street character with low-rise residential buildings along pedestrian thoroughfares, lined with flowers and sweets dealers.
Mahalaxmi temple compound has been listed as Mahalaxmi precinct since 1995. In the new heritage list of July 2012, it has been mentioned as special heritage with restrictions on height and development of locality. Residents said it is not appropriate to consider these properties on par with other buildings on Bhulabhai Desai Road, many of which command a premium price.