On Tuesday 31st December, Maharashtra govt announced the revised stamp duty and ready reckoner rates for 2014.These new rates will be used in effect from January 2014 for calculating minimum registration and stamp duty charges while registering property and these changes will tremendously hike in the property prices.
The government has decided that on lavish apartments with modern amenities like swimming pool, helipads and ceiling higher than 9 ft will need to pay up to 50% more stamp duty charges than normal regular apartments and also apartments that surpass 4,000 sq.mt or one acre of plot with amenities like swimming pool, club house and fitness center will need to pay additional 15%. This figure is over and above the up to 20% increase in the ready reckoner rates.
For example a flat in Bandra that surpass 4,000 sq.mt that would cost 10 cr in 2013 with stamp duty 50 lakhs then the same flat in 2014 will cost 12 Cr approx with stamp duty 60 lakhs (with 20% increase in the ready reckoner rates). If the same flat is having amenities like swimming pool and club house then the same flat will cost 13.85 cr with stamp duty 69 lakhs.
As per real estate experts, the government has smartly doubled the ready reckoner rates for super-luxury properties and bungalows which surpass 4,000 sq.mtr or one acre. For post 20% hike, Super-Luxury properties in Mumbai, RR rates may have increased to say 25,000 per sq.ft. So, for a luxury building with additional amenities, the property value will be hiked by an additional of 15% over and above the average of 20%. Hence, the RR rate will set up to Rs 28,750 per sq ft. Now, the stamp duty must be paid on the property value of Rs 28,750 a sq ft.
These new RR rates will also effected on luxury redevelopment projects. In the city construction cost for RCC buildings risen 32% i.e. from Rs. 19,600 sq.mtr (2013 yr) to Rs. 25,500 sq.mtr (2014 yr). In the suburbs it has risen 36% i.e. Rs 17,800 sq.mtr (2013 yr) to Rs 24,000 sq.mtr (2014 yr).
The government asked developers to pay stamp duty on the refundable deposit given to tenants for redeveloping a plot. If the property value falls below the RR rate, the stamp duty will be computed as per the land plus construction cost (LCC) method.When the stamp duty is computed by this method, tenants of 20-year-plus buildings will not get the benefit of even 5% depreciation of the property's value when they file their income-tax returns.
Since 2003, This is the first time the RR rates have increased for super-luxury properties and it is limited to luxury projects only. If the developer pays all the charges, the redevelopment schemes will not be effected as the hike in construction cost and stamp duty is not much.
Apartment sales have been dropped already in the past years, Hence the new hike in the RR Rates with further affect super-luxury properties and real estate market.
The increase in RR rates has multiple effects on buyer like:
1) 5% stamp duty
2) Registration fee of 1%
3) Service tax of 3%
4) Local body tax of 1%
5) MVAT of 1%.
Hence, a buyer will now have to pay a total of 11% as tax to the government. For example, for a flat of Rs. 10,000 per sq ft, the buyer will have to pay Rs 11,009 to the government, which is going to be body blow to the already limping real estate fraternity.
It is obviously a no-brainier that this extra burden of stamp duty levied by the relevant authorities will set the cat amongst the pigeons as far as the property developers are concerned.