Likely increase of 10% in ready reckoner rate to bail out cash-strapped govt

Maharashtra may raise ready reckoner rates by 10% to boost revenue, risking higher property prices and impacting the real estate sector.

MUMBAI: With the generation of revenue being a major task before it, the cash-strapped Mahayuti government is likely to increase ready reckoner (RR) rates by around 10% in the state. While expecting ₹55,000 crore this year from stamp duty collection, it hopes to mop up another ₹15,000 crore from increased RR rates. The move, however, could adversely impact the real estate sector, as property will become more expensive.

Likely increase of 10% in ready reckoner rate to bail out cash-strapped govt

The revenue department, which deals with stamp duty and registration, proposed the raise during its recent presentation to the finance department after it was asked about possible options to increase state revenue. Stamp duty and registration are the third-highest generators of revenue after GST and sales tax.

“RR rates are generally revised every year and come into effect from April 1,” said a revenue department official. “The state government has not revised the rates for three years for various reasons, including the two elections last year. The hike is now overdue, as the government is in dire need of revenue after the burden of populist schemes like Ladki Bahin.”

According to the officer, the quantum of hike is determined by various factors. “Apart from registrations in a year, changes and infrastructure development of different areas are also taken into consideration,” he said. “The unit in the rural areas is a village, while in the urban areas the units are smaller. In cities like Mumbai, there could be multiple units in one suburb. All this information has been collected by the town planning directorate, and the proposal will be finalised in February.”

An officer from the urban development department said that the difference between the RR rates and the actual sale price had widened on account of RR rates remaining the same for the last three years. RR rates are determined by the government, and properties cannot be registered below these rates.

The government expects a whopping rise in revenue collection with the hike. “Revenue has exceeded the target we set for the last three years, as there was tremendous growth in the real estate market after the Covid-19 slump,” said another officer. “If RR rates are hiked from April 1, they could bring in at least ₹15,000 crore. It is true that the hike in stamp duty could lead to an initial slowdown in registration of properties, but it will stabilise after a few months.”

Vinod Sampat, president of the Registration Fee and Stamp Duty Payers’ Association, said, “The RR rate hike will lead to a spiralling in flat prices and piling up of unsold flats. The accommodation industry is one of the highest employment generators and contributors to the GDP. Instead of hiking RR rates, the government should plug sources of corruption to increase its revenue.”