MUMBAI: The Maharashtra government is set to increase ready reckoner (RR) rates for properties between 5% and 30%, depending on the size and location in Mumbai and the rest of Maharashtra. The rise comes at a time when the residential market, especially in Mumbai, has been sluggish for almost all of 2012 due to unaffordable property prices.
However, no major price correction happened as developers cited slower civic approvals which affected supply. Rise in input costs also hurt business. Recently, property developers had requested the state government to slash RR rates that form the basis for stamp duty to avoid further burden on home buyers.
Realty developers are also concerned that the move to increase RR rates will deter customers from booking flats. "It's not a good move. Industry is already going through a bad patch and we were seeking support from the government. Increase in costs will be passed on to consumers leading to higher property prices and sales volume is expected to take a hit," said Paras Gundecha, president of realtor's body, MCHI-CREDAI.
RR rates for a particular location is used to calculate taxes, including stamp duty and registration, for a property transaction. Maharashtra's revenue minister Balasaheb Thorat said that the revenue department has already given a proposal for an increase in rates as it is seen as a sure way of boosting the state's coffers.
In 2011-12, Maharashtra government collected over Rs 14,000 crore as stamp duty from purchase and sale of property while in 2010-11 this figure was close to Rs 13,400 crore. Typically, the increase in RR rates is implemented from January 1, but it is likely to be issued in the first week of January this year. Revenue ministry officials confirmed that the state has received requests from various organisations representing developers that the RR rate should not be increased this year as the market was mostly stagnant.
However, the state's policy is to generate at least 10% more revenues from stamp duty than what it had collected last year. The state Cabinet is expected to give its approval to the increase in rates in the first week of January.