Saturday, 2 January 2016

Stamp duty on property won't rise for 3 months

Some good news for property buyers. You can save on registration fee and stamp duty for the property you have just bought or plan to buy during the first three months of 2016.

This year, the hike in ready reckoner (RR) rates will be effective from April 1, 2016. In other words, current rates will continue till March 31. For the first time in the history of the state's financial affairs, the new RR rates will come into effect from the first day of the financial year instead of the calendar year.

"We will announce the new rates on April 1. We cannot tell the range of the rate hike now as we will have to consider property transactions during the January 1 to March 31 period before calculating and announcing the new rates," said stamp duty and registration officials. Stamp duty experts say the hike could range from 15% to 30%.

At the end of every year, there is always a rush at registration offices due to the hike in RR rates from January 1. This year, the scene will be different. Sources said the government might also think of permanently shifting the RR rate hike every year to April 1 instead of January 1. "The governor may soon sign a notification to extend the hike by three months," said sources.

The RR rate is the base rate that determines the market value of a property on which the government collects stamp duty and registration charges in the course of a property transaction. While stamp duty is 5% of the ready reckoner or market rate, whichever is higher, registration charge is 1% of a property's total value. Since these are calculated based on RR rates, hike in the rates implies an additional burden on property buyers.

Meanwhile, government officials said the administration was thinking of hiking RR rates only for major urban centers whereas for areas such as Marathwada and Vidarbha, where property registration was poor, the hike could be negligible.

Some officials with the department of registration and stamps said they had recommended a moderate to low hike, but the state government has decided to delay its implementation to boost the sluggish property market.

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