Revised Reckoner Rates Shocks Realty Industry

Days after the Maharashtra government decided to temporarily reduce stamp duty on housing units from 5 percent to 2 percent until December 31, 2020, it has now decided to hike the ready reckoner (RR) rate i by 1.74 percent in the state. The new rates will be applicable from September 12. “It is surprising, that in a scenario where the suggestion, ‘reduce price of residential real estate’ has been covered by media – be it Deepak Parekh, Nitin Gadkari or  Piyush Goel – the state government has instead opted to enhance the RR value. Income tax provisions mean a developer cannot sell at a price point lower than the RR rate, as it translates into taxation burden for both, buyer and seller,” said Niranjan Hiranandani, president (national) NAREDCO and Assocham. "While the entire real estate industry was expecting a reduction in the ready reckoner rates, the Maharashtra government has increased them which is bound to have an adverse impact on the number of new project launches and puts the viability of ongoing projects under question," said Deepak Goradia, president, CREDAI-MCHI. Anuj Puri, chairman, ANAROCK Property Consultants said the industry is dumbfounded on increasing the RR rates after reducing the stamp duty in most areas of Maharashtra that has comes as a surprise, to say the least.” Bringing down the RR rate considerably at this juncture was something that everybody was looking forward to as it would have given some room to developers to bring down the prices. Today in most of the micro-markets, the RR rate is almost equal to the ongoing sales price and buyers as well as sellers have to pay tax if sales happen below the RR rate. This has been the limitation cited by developers to bring down prices, and an increase of RR rates further limits the room for them to bring down the price while too marginal a reduction makes no difference at all.”