Maharashtra's Ready Reckoner Rates Revised : 5 to 30 % Up in State...!

* Duties, Taxes constitute nearly  25 % of the Property Cost..!

* Cost of Construction will go up 5 to 20 %.!

Be prepared to pay more to buy a home in Mumbai City. For, the Maharashtra government has increased the ready reckoner rates by 18 to 20% in Mumbai & 5 to 30% elsewhere in the state.

Value of Residential Properties Increase ..!

This will lead to an increase in the base value of residential properties. Therefore, any escalation in the ready reckoner rates results in higher property prices and, as a result, in higher stamp duty and registration charges.

Ready reckoner rates are minimum prices set by the state government, below which sales are not allowed. It is the average rate in any given area or /  a region.

Ready reckoner rates have risen for all properties including residential, commercial, shops and land.

For instance, in one locality in Andheri (East), the ready reckoner rates have gone up from Rs. 1.23 lakh to Rs. 1.41 lakh (per square meter), while in another locality it has gone up from Rs. 78,700 to Rs. 86,600 per square meter, for residential flats.

Hence, any rise in the rate indirectly means that the property prices in that region will increase.

While properties will get dearer, house buyers will have to shell out extra on series of other things. Along with stamp duty &  registration, one will have to shell out more on value-added tax ( VAT), service tax, and property tax, as all these are linked to the agreement value or  / ready reckoner rate, whichever is higher.

Duties, Taxes constitute about 25% of the Property Cost..!

According to many experts, all these expenses including duties & taxes constitute around 25%  of the property cost.

Stamp duty of 5% (five per cent) and 1% (one per cent) registration charges are payable on the ready reckoner rate or the agreement value, whichever is higher.

There are instances where the agreement value of a property could be less than the ready reckoner rate. For instance, if the rate is Rs. 1 lakh & the agreement value is Rs. 90,000, then the stamp duty & registration will be payable on Rs. 1 lakh.

Mr. Sunil Mantri, Chairman, Mantri Developers said, “However, in such a case under Section 50 C, the developer and house buyer may be called in order to disclose their transaction information on how the property is being sold below the ready reckoner rate”

If your area is laced with slums or you have a public toilet near your building, there are chances that your agreement value of the house is lower than the ready reckoner rate prevailing in that area. Additionally, if you are situated in a flood  or /  an earthquake-prone area, again your agreement value may dip.

For instance, the property rate of commercial areas in Parel & Andheri are lower than its ready reckoner rates. This also happens many a times because the ready reckoner rates largely keep increasing in a given area without considering the slug a particular market has undergone.

The Borivali region has witnessed a substantial increase in its ready reckoner rates. For instance, the market value of a flat with built up area of 750 square feet from Borivali region would increase to about Rs 1.80 crore from the present level of Rs nearly 1.35 crore. This means that a house buyer who would have earlier paid stamp duty and registration on Rs. 1.35 crore will now have to pay the duties on Rs 1.80 crore.

Impact Flat Owners..!

The revised or increased ready reckoner rates will also impact flat owners who are buying resale flats, as they have to bear the stamp duty and registration charges.

However, a property-buyer buying a new flat all together will have to bear some additional costs such as VAT and service tax.

Based on the revised ready reckoner rates, property buyers will have to pay a higher VAT and service tax, too. One per cent VAT (on the agreement value) is payable on all under-construction flats. If your building is ready & flats are ready for possession, then this is not applicable to you.

Pujit Aggarwal, MD and CEO, Orbit Corporation Ltd, said, ''That house buyers who have made a down payment of at least 20 to 30 % and have received allotment letters would not be affected as the value of the house would have already been determined by then. Hence, this is applicable only to those house buyers who are yet to make any payment to buy their property”

Similarly, a property buyer also has to pay a service tax of 2.67% if the flat is under construction.

“Both the taxes are charged based on the agreement value, and since the property prices are set to increase one will definitely have to pay more depending on the location and square feet area,” adds Mr. Sunil Mantri.

To add to the misery, common areas such as terrace, corridors, shafts & staircase are now under the fungible floor-space index  (FSI) umbrella, for which developers / promoters / buliders will have to pay extra to build these. Developers will have to pay an average of 25 to 30% of the ready reckoner rates.

Mr. Bharat Dhuppar, Chief Marketing Officer,Omkar Realtors & Developers said, “Due to this, the cost of construction will go up anywhere between 5 to 20 per cent depending on the project, designs and location”

For instance, in Mumbai suburbs, the construction cost has increased from Rs. 16,000 to Rs 17,600 a square meter, while it has gone to Rs. 19,200 from Rs. 17,500 a square meet in Mumbai city.

Real estate experts say this is a double whammy as along with the hike in ready reckoner rates, the cost of construction for developers / promoters / builders has also increased. It is obvious that developers will recover such costs incurred by them from house buyers. This may lead to developers reducing the area per flat & also the passage area in the building to save costs.

Property Tax..!

Revised ready reckoner rates will also increase the amount of property tax a society collectively pays.

Property tax was earlier payable on the ratable value of a flat whereas it is now calculated on the property’s market / capital value, which is usually higher. But there could be some relief for house buyers.

Mr. Ameet Hariani, Managing Partne, Hariani & Company, told, “One should remember that even with the revised ready reckoner rates, property tax paid on residential flats and commercial properties can not be more than double & triple from the tax paid in the year before that.”

When a property tax is applied, the value of the property is calculated depending on the building structure, number of elevators, number of floors and so on.

 “For instance, a smaller building would pay only 80 % of the tax compared to a taller building,” adds Mr. Ameet Hariani.

Share: