RR rates: Credai seeks clarity
Jan 27, 2014
Source : The Economic Times


PUNE: Developers in the city are mulling an all-out effort to convince the state government lower the ready reckoner (RR) rates and make the methodology of calculating those transparent.

The RR rates form the basis for determining the stamp duty and other government levies that a property buyer has to pay while registering the buying transaction with the state revenue authorities. The RR rates for the new year came into force on January 1, 2014 and include, for the first time, additional loads for amenities like swimming pool or agymnasium and a floor-wise addition increment, the developers said.

Besides, the RR rate charts indicate a rise of 5- 20% for various areas, but the increase works out to as high as 40% due to the fine-printed footnotes below these charts, said Hemant Naiknavare, president of Confederation of Real Estate Developers' Associations of India (Credai) Pune Metro on Monday. He cited the example of land where a developer can use transfer of development rights (TDR). "The price of such land is higher because of the TDR availability and the RR rates add a 40% load for the same reason," he said.

"We will try every method of persuasion with varius arms of the government. We are also seeking legal opinion if we can challenge the quantum and the arbitrary manner in which the RR rates have been worked out," he added.

The arbitrary rise in the rates and the additional loads have created a situation where the selling rates for properties are higher than the RR rates, he said, adding that the double whammy in this situation is that the difference in the two attracts income tax from the developer and gift tax from the buyer.

Credai Pune Metro vice-president Rohit Gera said the office of the Inspector General of Registrations (IGR) has said the determination of RR rates is on the basis of data it collects from the offices of sub-registrars across the state but there is no transparency in the collection of data and the chart for RR rates "simply comes into force" on the first day of each year.

Naiknavare said Credai has held meetings with the IGR to discuss how the determination of RR rates can become realistic, transparent and reasonable but the effort has yielded no results. "We now plan to meet the state revenue minister as well as the chief minister to put across our point," he said.

Sanjay Bajaj, managing director - Pune, for real estate advisory Jones Lang LaSalle India, said, "The increase in RR rates will impact housing sales on account of increased stamp duty, regardless of whether it is in terms of the primary or secondary market. The revised rates could dampen growth, since the buyers are shouldering the brunt of service tax, sales tax, value added tax and taxes and duties on construction materials."

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