The government’s new Ready Reckoner (RR) rate has thrown up some major anomalies, thereby raising the hackles of city developers. As per the revised government rates, Andheri has a price tag of Rs13,420 per sqft while Bandra becomes cheaper at Rs11,350 per sqft.
With the new rates coming into effect, property prices in city and its suburbs, particularly western suburbs, will go north as the new rates are 5-30% higher than the old ones.
According to government officials, stamp duty is charged on the basis of RR rate. “Each year, government revises its RR rate after various observations and recommendations. The sale component of a particular locality is also crucial to defining its RR rate. In western suburbs, Thane and Navi Mumbai, sale was quite high last year. As a result, RR rate has been increased in these areas,” said officials on condition of anonymity.
Besides sales, proximity to schools, colleges and transport facilities as also response to various property exhibitions are important for fixing the RR rate. “Last year, the government had earned Rs14,000 crore revenue through stamp duty. The government has set a target of earning at least 10% more revenue each successive year. Developers should not make a hue and cry over this surge in the RR rate since market rates are still higher by 30-50% of the revised RR rate. Such revisions are routine,” said another official.
The government has also increased the construction cost this year, resulting in property price rise. In 2013, the construction cost is Rs19, 200 per sqmt in city and Rs17,600 per sqmt in suburbs as against last year’s Rs17,500 per sqmt and Rs16,000 per sqmt, respectively.
Paras Gundecha, president of Maharashtra Chamber of Housing Industry (MCHI), said the government should have differentiated the good view and normal view properties while fixing the RR rate. This would result in property price spiral, he added.
Justifying the RR rate revision, another government official explained that in buildings without lifts and other facilities, the new rate provides for almost 10-20% decrease in stamp duty charges.