Govt reckoner rate has revenue in mind

This year, a new trend observed in the real estate market has realtors bewildered. Rates of residential property released by the state government exceed the prevailing market rate for a given area.

Every year, the government releases its estimation of prices of property in various areas of the metro. So far, the trend has been that these prices are lower than prevailing market rates. The government releases its ready reckoner at the start of the calendar year. Historically, the trend has been that these rates are 30% to 40% lower than the market rate.

However, the government’s ready reckoner of residential rates for 2013 shows that prices in most of the locations have increased between 5% and 40% over the last year.
Realtors say the state government has done this to meet its annual target of stamp duty. The reckoner rate determines amount of stamp duty payable on sale of each flat. It is computed at 5% of the sale price.

For instance, according to government data, the per-square-foot rate of residential property in Manpada, Thane in 2012 Rs6,100. It has risen to Rs7,200 in 2013. That’s a raise of almost 22%. Ditto in Navi Mumbai. For this year, the government rate is Rs5,500 per square foot in Kharghar as against the market rate which is between Rs5,000 and Rs7,000.

Managing director of Puranik Developers, Shailesh Puranik, said that state revenue officials have increased reckoner rates without understanding ground realities. “It seems revenue officials have not done any proper homework. Let’s hope the government rolls back the reckoner rate,” said Puranik. “It will bring relief to many people who are already bearing the brunt of high inflation rates.”

Agreeing that reckoner rates are a bit high, general secretary of Maharashtra Chamber of Housing Industry, Manohar Shroff, said that the government should charge stamp duty on the basis of carpet area instead of on built-up area which works out higher. “The decision to charge according to built-up area is totally wrong and unethical,” said Shroff. “When the government forces us to sell flats as per carpet rate, why is it now charging stamp duty as per built-up area?”

Government officials, who did not wish to be named, said they have to increase reckoner rate by at least 10% every year. “This year, the state has set itself a target of Rs15,000 crore. We have to increase the reckoner rate to meet the set target,” the official said.