In a Shocking Move, Maharashtra Government Hikes Ready Reckoner Rates with Immediate Effect under the Guise of Rationalisation
While property prices are on a decline and rental rates are crashing, the Maharashtra government has announced an increase in ready reckoner (RR) rates to extract higher taxes under the guise of rationalisation. 
 
Although RR rates for Mumbai have been reduced marginally by 0.6%, the average increase for the rest of the state, including MMR, is 1.74%.
 
The government has called the hike marginal, compared to the increase of as much as 10% in previous years, while also adding that the revision has come after a gap of two years and five months. But RR rates for determining taxes are supposed to be based on property prices, which have not increased in this period. 
 
This announcement by inspector general of registration and controller of stamps comes close on the heels of the limited period stamp duty cut, which was announced on 26th August.
 
Maharashtra government had announced that stamp duty on sale deed documents would be slashed by 3% from 1st September to 31st December 2020, and by 2% from 1st January 2021 to 31st March 2021.
 
The real estate sector has seen a significant slump in this year for residential sales. New launches have remained subdued on the back of bleak economic environment, the COVID pandemic and muted consumer sentiment.
 
The move to cut stamp duty had earlier been welcomed by the real estate sector. Home-buyers and developers had hailed it as an attractive incentive and analysts had commented that this cut in stamp duty would also help the government generate more revenue as registrations were expected to increase.
 
Mr Deshmukh revealed that daily transactions in the state, which used to be around 6,000 to 7,000, has increased to 10,000 after reduction in stamp duty charges.
 
However, this RR rate increase is a dampener and several people from the sector have expressed their disappointment. Industry experts said this hike would further adversely affect the realty sector, which is already in a battered state.
 
Noted real estate lawyer, Anil Harish (Partner DM Harish & Co Advocates) expressed his shock and told Moneylife “It is totally inappropriate to increase the RR values, and particularly at this time! The real estate sector-all the developers, the workers and the customers need support at this most difficult time and not this kind of step, which is also inconsistent with the support that the government has given by reducing the rate.”
 
A real estate developer who does not want to be quoted, told Moneylife, “This hike in RR rates at this time is unrealistic. At present, property prices are already down by about 30% and there are no buyers in this Covid crisis. In addition, there is unsold inventory and the trend is of a further fall in property prices. In this scenario, this hike in RR rates is unwarranted.”
 
RR rates—also known as circle rates or guidance values - are the minimum values set by a state government below which a property cannot be registered. Each area within a city has its own RR rate on which stamp duty is calculated. To align circle rates with the actual market prices, most state governments previously regularly reviewed and increased the RR rates in cities either annually or every two years. However, market values increased only marginally in the same period.  This had led to RR rates being higher than prevailing market rates in many areas.  Property prices have fallen in Mumbai, but the RR rates are much higher. There is as much as a 20% gap between the RR rate and the market rates in some areas.
 
In the past two years, RR rates for property in Maharashtra were kept unchanged. Due to the slump in real estate sector, the same rates from FY17-18 were continued in FY18-19 and FY19-20. 
 
At the end of 2019, however, the exercise to revise the RR rates was carried out.
 
The new revised rates were to become applicable from 1 April 2020.  In March-end, Maharashtra government had announced that due to the ongoing COVID pandemic crisis and the lock-down, the same rates would be continued for the current financial year.
 
The state government, however, asked the inspector general of registration and controller of stamps to finalise the annual RR rate chart in June 2020. 
 
The exercise was completed and this hike in RR rates has now been announced.
 
The state government has reduced the RR rates in Mumbai, but increased them in other municipal corporations, in MMR and the rest of the state. As per the announcement, the RR rates have been increased by average 2.81% in rural areas, which covers 42,167 villages; 1.29% in 368 municipal council areas and 1.02% in 27 municipal corporation areas.
 
Mumbai city and Mumbai suburbs are the only areas in the state where the RR rates have been cut. In Thane, the rate is up by 0.36%, 0.25% in Mira Bhayandar, 0.76% in Kalyan-Dombivali, 0.99 %in Navi Mumbai, 0.97% in Ulhasnagar, and 0.12% in Bhiwandi-Nizampur. Nandurbar (around 4%), Panvel (5.3%) and Pimpri Chinchwad (3.41%) saw the highest hikes.
 
The hike in RR rates in Raigad, Ratnagiri and Sindhudurg is 3%, 2.69% and 2.48%, respectively. 
 
In Vidarbha region, RR rates have registered the highest increase—by an average 1.99% in Washim district. In Bhandara district, hike in RR rates is the lowest—0.05%. 
 
As per the official chart, Nagpur district has registered an average increase of 0.60%. This average increase includes 1.13% hike in rural areas, 0.4% rise in growth area, 0.77% in municipal council/nagar panchayat areas.  In case of Nagpur city, the increase is 0.1% as per the official announcement. 
 
This move to hike in RR rates, amid the COVID-19 pandemic and adverse impact on economy in general while the real estate sector is seeing arguably the biggest slump, has shocked the entire real estate sector in the state.
 
There are specific income-tax (I-T) provisions according to which a developer cannot sell at a price point lower than the RR rate, as it translates into a taxation burden for both, buyer and seller. In this situation, the expectation was that the state government would reduce the RR rates instead, it has chosen to increase them. 
 
On the one hand, the state government reduced the stamp duty in the last week of August, while, on the other hand, it has now increased RR rates. 
 
The official government announcement has justified the hike by saying that the RR rates had not been revised since 2017-18. Further, it added, that the rates have been increased considering extension of the jurisdiction of municipal corporation/council, establishment of new municipal council/nagar panchayat, new growth areas, approval to development plan, change in user class of land, etc. Across the state, an increase of 2.81% has been effected in RR rates. This includes hike of 1.89% in growth area, 1.29% in municipal council/nagar panchayat areas, and 1.02% in municipal corporation area.
 
The 0.6% cut for Mumbai is negligible, and from a home-buyer’s point of view, it is too little to make any substantial impact on the apartment prices.
 
There are reports that Mr Deshmukh, inspector general, stamps and registrations, has indicated that the rates could be further revised downwards by 2% for Mumbai, if the government accepts the Deepak Parekh Committee’s recommendations.  
 
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    COMMENTS

    ssndeepmore89

    5 days ago

    This action of the Govt increases the pain of the people & is totally unwarranted

    s5rwav

    1 week ago

    Seems Absurd and Outrageous & Atrocious Act of Shiv Sena Govt in Maharashtra. I am Babubhai Vaghela from Ahmedabad. Thanks.

    Resource Constraints Hamper Hospital in Remote Nandurbar District of Maharashtra
    Maharashtra is currently the worst state to be affected by the pandemic, with over 9 lakh positive patients and 28,282 deaths as on 11 September 2020. Many private health facilities such as nursing homes and small hospitals in villages, towns and remote areas have closed down due to fear of covid-19. 
     
    Those that are functioning have become exorbitantly costly for the common man, and are fearful of admitting any critically ill patients. The public health system is overburdened and unable to adequately cater to the demands of both covid and non-covid patients. 
     
    In the Nandurbar district of Maharashtra, where a majority of the population is below the poverty line as well as illiterate, there has been a major neglect in healthcare as they mostly live in squalid conditions, trying to save as much as possible. Covid cases are on the rise (currently at 3606 cases) in this district and are expected to peak in the next couple of months. 
     
     
    Chinchpada Christian Hospital, is one of the few that has continued to remain open and functional in Nandurbar, while taking necessary precautions and following  infection prevention and control practices even with the existing resource constraints. As facilities in the surrounding areas have closed down, and many being fearful of taking in any sick patients, this hospital has seen a rise in critically ill patients who come to seek relief. 
     
     
    The hospital also has a low cost, poor-friendly image, which draws needy people not only from within Nandurbar district, but also from neighbouring districts of Dhule, Tapi, and Nashik. They have started taking on patients suspected of covid infection, testing them and providing care accordingly. After being notified as a Dedicated Covid Health Centre (DCHC) by the district administration, they have also started admission and treatment of moderately ill patients.
     
    As recently as last week, they have been admitting covid positive patients and have designated  30 beds for covid patients and 20 beds for non covid patients. However, the ability of poor patients, especially daily wage labourers and returned migrant workers to pay for the services has also become incredibly difficult due to the pandemic situation.  
     
     
    With the growing number of covid cases and critical care patients, Chinchpada Hospital is currently in desperate need of support in the form of hospital supplies and equipment. They urgently require supplies such as N95 and 3-ply masks, PPE kits, medication for patients, disposable gloves, hand sanitisers and more. 
     
     
    If you would like to support the efforts of Chinchpada Christian Hospital, Dr Deepak S. Singh, Senior Administrative Officer and Medical Superintendent, has been overseeing the efforts at Nandurbar and can be reached at (telephone): 02569-243226, 243588, 243243 or email: [email protected]/ [email protected]
     
    The hospital is located at Chinchpada P.O., Navapur Taluq, Nandurbar District, Maharashtra. 
     
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    s5rwav

    2 weeks ago

    Hats Off to these Dedicated Persons Taking Care of Helpless Citizens and #ShameOfIndia that Mrs #NirmalaSitharaman the Finance Minister of Mr Narendra Modi Govt at Centre since the Year 2014 as also #RBIGovernor at Mumbai Mr #ShaktikantaDas for Ignoring #PublicHealth. I am Babubhai Vaghela from Ahmedabad on Whatsapp Number 9409475783. Thanks.

    No Maratha quota for now: SC refers issue to larger bench
    A three-judge bench of the Supreme Court on Wednesday stayed the implementation of the Maharashtra State Reservation for Socially and Educationally Backward Classes (SEBC) Act 2018, and referred the issue to a bench of five judges or more for the final adjudication.
     
    The Act provides reservation in education and employment to the Maratha community.
     
    Justices L. Nageswara Rao, Hemant Gupta and S. Ravindra Bhat held that no appointments and admissions based on the Maratha quota will be made for 2020-21, however, the postgraduate admissions taken place already will not be altered.
     
    The issue of Maratha reservation will be placed before Chief Justice S.A. Bobde, who will constitute a larger bench to hear and decide the matter.
     
    The parties involved in the matter had contended before the bench to refer it to an 11-judge bench, to see whether there could be a breach in the the 50 per cent cap on reservation.
     
    The petitioners challenged the Bombay High Court judgement passed in June 2019. They contended that the Act, which provides for 12 per cent and 13 per cent quota to Maratha community in education and jobs, violates the principle laid in the 9-judge bench judgement of the apex court in 1992, which capped the reservation at 50 per cent.
     
    The High Court had upheld the Maratha quota, where it ruled that reservation should be 12 per cent in jobs and 13 per cent in education.
     
    The counsel seeking reference to a larger bench contended before the bench that the 50 per cent ceiling was breached in many states, as a result of the 103rd constitutional amendment providing EWS reservation.
     
    The counsel contended that challenge to the EWS reservation has already been referred to a Constitution Bench, therefore the same process should be followed in dealing with this issue.
     
    The counsel, who opposed the reference to a larger bench, contended before the bench the case should be heard on merits, and if, during the hearing the bench thinks reference is required then it should be done.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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