January 29, 2025 | Mumbai, India
The Maharashtra government is reportedly considering a 10% increase in Ready Reckoner (RR) rates for the financial year 2025-26. This move aims to generate additional revenue of approximately ₹55,000 crore from stamp duty collections and ₹15,000 crore from increased RR rates of land, taking the total expected revenue to nearly ₹70,000 crore. However, real estate experts believe this increase could impact homebuyers across Mumbai and the state.
RR rates, also known as circle rates or guidance values in other states, are the minimum prices set by the government for property transactions. These rates determine the base amount for calculating registration fees, stamp duty, and even capital gains tax. Additionally, RR rates influence project costs for developers, as they are used to calculate various premiums and taxes payable for development approvals.
The last revision of RR rates took place in 2022-23 when the Maharashtra government increased them by 8.8% across all municipal corporations except Mumbai. Prior to that, an increment of 1.74% was made in 2020-21. If the proposed 10% hike for 2025-26 comes into effect, it will be the most significant increase in recent years.
Real estate developers have expressed concern over the potential increase in RR rates. While an increase in RR rates for residential, commercial, or retail properties may not directly affect homebuyers, a hike in land RR rates leads to a higher tax burden for developers. This increased project cost is eventually passed on to the homebuyers, making property purchases more expensive.
A Mumbai-based real estate developer, speaking anonymously, stated, "When land RR rates increase, developers have to pay higher premiums and charges, which escalates the overall cost of new projects. While developers might absorb some of the impact, the additional costs will ultimately be passed on to homebuyers."
In Mumbai’s real estate market, where there is either a healthy supply or oversupply in certain areas, the effect of an RR rate hike could be more pronounced. The willingness of developers to absorb the burden is limited, and buyers could face higher property prices, even in micro-markets where supply exceeds demand.
Recognising the potential impact on the real estate sector, a 10-member delegation from the National Association of Real Estate Developers Organisation (NAREDCO) recently met with Maharashtra’s Revenue Minister, Chandrashekhar Bawankule. The delegation emphasised the need to keep land RR rates unchanged for the upcoming financial year to prevent undue pressure on developers and homebuyers.
Industry insiders argue that while the state government aims to boost revenue, an increase in RR rates could dampen property sales, slow down new developments, and ultimately reduce the affordability of homes in Maharashtra.
With the proposed increase still under discussion, homebuyers and developers are closely monitoring the government’s decision. If the hike is implemented, it could reshape the real estate landscape by making property transactions costlier, potentially leading to reduced demand and slower market growth.
For now, stakeholders in the industry hope that the government takes a balanced approach, ensuring economic growth while safeguarding the interests of homebuyers and developers alike.
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