Rate Freeze Supports Real Estate Sector Amid Economic Uncertainty: Builders

Nagpur: The state government's decision to keep ready reckoner rates unchanged is expected to support the real estate sector amid economic uncertainty triggered by the volatile geopolitical situation, builders said while welcoming the move.

The decision comes despite a noticeable rise in property prices during the last financial year, sources said. Ready reckoner rates are revised based on changes in actual market prices in the real estate sector.

These rates serve as the benchmark for calculating liabilities such as stamp duty on property purchases, capital gains tax on profits from the sale of real estate, and property tax levied by civic bodies. Even if a property transaction is registered at a lower value, stamp duty must be paid according to the ready reckoner rates applicable to that area.

The same principle applies to the calculation of capital gains liability. The objective is to prevent underreporting of transaction values. Ready reckoner rates are revised at the start of every financial year after a yearlong exercise. Real estate price trends are assessed on the basis of registered sale deeds, stamp duty collections, and inputs from town planning offices, which are then sent to the revenue department.

Sources said that this year too, a marked increase in prices was recorded, ranging from 5% to more than 10% in some pockets of the city. However, the final decision on revising the schedule rests with the government.

Last year, the state implemented a 5.85% increase in ready reckoner rates. Before that, there was no change from 2022-23 till the previous fiscal, sources said. BJP Maharashtra spokesperson and chartered accountant Samir Bakre said the decision may not significantly affect the state's revenue.

On the other hand, it comes as a relief and a measure to keep sentiment alive in times of economic uncertainty, he said. Gaurav Agrawala, former president of the Nagpur chapter of Confederation of Real Estate Developers' Associations of India (CREDAI), said any increase in ready reckoner rates could have had a cascading effect on market sentiment.

It is not just stamp duty or capital gains that are linked to these rates, but also a number of approvals and other government estimates. If there is a hike, it is usually passed on to the buyer. The move will help keep buoyancy in the sector alive, he said.