Ready Reckoner Rate

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What are Ready Reckoner Rates?

The ready reckoner rate is the minimum valuation at which a land asset should be registered in the case of a transfer. All state governments publish area-wise ready reckoner rates of properties on a yearly basis to prevent stamp duty evasion through undervaluation of agreements and to reduce disputes over stamp duty quantum.

What Impact do Ready Reckoner/Circle Rates Have?

In Mumbai, the ready reckoner rate is referred to as the Circle Rate. In Delhi, it is referred to as the Circle Rate. The government's assessment of minimum property values in various areas is this rate. Every state, city, and neighbourhood inside those cities have a different rate. Authorities use a number of elements to assess the price of real estate in a certain area. Based on these characteristics, a benchmark is established below which no property transaction in that area is permitted. This rate is referred to as the Ready Reckoner/Circle rate. It is the lowest price at which the government will charge stamp duty reckoner rate and registration fees.

Consider the following scenario: You paid Rs. 5,000 per sq ft for a residential house. If the local ready reckoner rate is Rs. 4,000 per sq ft, you will have to pay stamp duty and registration fees on the higher value, i.e. the market value. In any case, property registration in that area cannot be done for less than the ready reckoner rate's minimum value.

RR rates are usually lower than current market rates for properties in a given location. The rate is evaluated and updated on a regular basis in order to bring it closer to market rates. Because real estate transactions are often private and the price is not revealed, state governments want a benchmark to ensure that they do not miss out on a significant source of revenue.

What is the Impact of the Ready Reckoner Rate on Real Estate Transactions?

While RR rates define the minimum price at which property in a given area can be sold, there is no maximum price at which a property can be sold. As a result, the RR and market rates are significantly different. The majority of property transactions in India are based on the current market prices in a certain area. This market rate is used to compute the stamp duty and registration fees that the home buyer must pay. As a result, a large disparity between the RR and market rates results in a revenue loss for the government. The stamp duty and registration costs will be calculated using the RR rate in rare circumstances where the RR rate is higher. Higher RR rates, on the other hand, deter home buyers from registering their properties. The state government can promote transparency in real estate transactions while also ensuring that they do not lose income by periodically modifying RR rates and bringing them closer to market rates in each region.

Importance of Ready Reckoner Rates

The RR rate of properties in a certain location is a strong indicator of how much money a prospective house buyer will have to spend. When the RR rate is predicted to be increased, market rates of properties are usually always higher, and property prices in an area tend to rise. It is also advantageous for buyers to purchase property in an area where the difference between the RR and market rates is smaller, particularly if the acquisition is funded with a online home loan.

What are the Best Places to look for Ready Reckoner Rates?

Check the government websites to find out what the current ready reckoner rates are in a particular area. The government adjusts the ready reckoner rates on a regular basis.

Buyers frequently conspire with sellers to avoid taxes by agreeing to register the property using the circle rate while the buyer buys at the current market rate. This saves sellers money on capital gains tax and saves buyers money on stamp duty. The buyer just pays the vendor the remaining balance in cash. The government loses money as a result of this. This is why authorities adjust the RR rate on a regular basis to maintain it close to the market rate.

Effects of Selling Homes at Below-Market Rates

The ready reckoner rate is the government-set minimum value on which property transactions are conducted. If the transaction value is 10% or less than the locality's current ready reckoner rates, the buyer and seller may face a tax burden. Selling a property for less than the ready reckoner rate, also known as circle rate, can result in a penalty of 35 percent of the difference between the original and revised price, according to Section 43CA of the Income Tax Act. It will also apply to the home purchaser.

The real estate sector's slump following the pandemic in 2020 and previous events such as demonetisation have resulted in a huge increase in unsold inventories. With no more room to lower prices, real estate developers have battled to maintain profitability. As a result, the Confederation of Real Estate Developers' Associations of India (CREDAI) and the National Real Estate Development Council (NAREDCO) proposed in 2020 that appropriate amendments to the income tax laws, as well as changes in ready reckoner rates, be made in order to keep them in line with current market prices.

Ready Reckoner Rate FAQs

  • ✔️What is the guidance value?

    The guideline value is the lowest value at which a property can be registered. In Maharashtra, it is also known as the ready reckoner rate.

  • ✔️Who decides on RR rates?

    Because land is a state subject, state governments have the right to determine RR rates.

  • ✔️Is the RR rate the same in all sections of a city?

    Every neighbourhood in a city has its own RR rate.

  • ✔️In a year, how many times are RR rates revised?

    The tariffs are usually revised once a year by the states.

  • ✔️What is the Navi Mumbai ready reckoner rate?

    You may find district-specific information regarding the online reckoner rates on the IGR (Inspector General of Registration and Controller of Stamp) Maharashtra website. To find out the ready reckoner rates for a certain location, choose the taluka and village.