Stamp duty in Maharashtra post rebates and premiums on ready reckoner rates

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When a property transaction takes place, in addition to the value of the property, there are added charges such as stamp duty and registration charges that one has to pay.

What is stamp duty?

Stamp duty is the one time tax that is levied by the government for the transfer of property from one owner to another. Stamp duty has to be paid by the buyer in a property transaction.

How is stamp duty calculated?

Stamp duty is a percentage of the property value. In Maharashtra, it is 7% of the total value of the property for men and 6% of the total value of the property for women.

Initially, this stamp duty was calculated on the basis of the agreement value. However, this resulted in malpractices, such as underreporting of the transaction value, thereby, depriving state governments of revenue. To stop this malpractice, the various governments started issuing guidelines for minimum values on which the stamp duty would be payable. This was done through notification of ready reckoner rate.

What is ready reckoner rate?

The ready reckoner rate is the minimal value set by the government below which the stamp duty of a property cannot be paid. This depends on various factors such as location, age of the property, area of the property, type of property etc. The Maharashtra government issued its first ready reckoner on January 1, 2001. While this term is known as ready reckoner rate in Maharashtra, it is known as circle rate in north India and guidance value in parts of south India. The ready reckoner rates are governed by the IGR of a state.

However, note that if the value of the consideration stated in the agreement is higher than the ready reckoner valuation, the stamp duty will be payable on the higher value as stated in the agreement.

The stamp duty ready reckoner rates are based on the City Survey (CTS) Number, which takes into account only the location of the property and does not consider specifics of the of the property, like age of the building, whether it has an elevator or not, whether it is a high-rise building, etc. Hence, for determining the exact value on which the stamp duty is payable, various states allow for some deductions from and additions to the ‘stamp duty ready reckoner rates’.

Let us understand the various deductions/additions applicable in the state of Maharashtra for residential flats and offices in a building.

Stamp duty depreciation

The stamp duty depreciation depends on a property’s age. This can be applied only to the property’s market value. Note that if the sale price that is agreed is higher than the market value, then the stamp duty depreciation rule doesn’t apply.

Maharashtra Stamp Duty: Deduction based on age of the building

Age of the building in years	Depreciation permissible for a permanent structure (in %)	Depreciation permissible for a temporary or semi-permanent structure (in %)
Up to two years	Nil	Nil
More than two years but up to five years	5	5
More than five years but up to 10 years	10	15
More than 10 years but up to 20 years	20	25
More than 20 years but up to 30 years	30	40
More than 30 years but up to 40 years	40	55
More than 40 years but up to 50 years	50	70
More than 50 years but up to 60 years	60	80
More than 60 years	70	85

For old buildings, the stamp duty laws allow for deduction from the rates stated in the ready reckoner.
The quantum of depreciation, will be higher for semi-‘pukka’ (permanent) or ‘kachha’ (temporary) structure, as against an RCC structure or any other ‘pukka’ structure.
No deduction is available for any structure, which is two years old or less. So, older the building, higher is the quantum of depreciation available from the stamp duty rates.

For example, a permanent structure of more than 60 years, is entitled for depreciation as high as 70% per cent, while a temporary structure of the same age, will have depreciation of 85%. The quantum of depreciation for permanent and temporary structures, for varying ages, is given below.

Maharashtra stamp duty: Deduction for buildings without elevators

As buildings with elevators have higher market value, the stamp duty rules allow for a deduction, in case the building does not have an elevator.
The quantum of deduction, will depend on the floor on which the flat is situated.
No deduction is available for ground and first floor flats.
Second floor flats will get a deduction of 5%, whereas, apartments on the third floor will be entitled to a 10% deduction.
The maximum deduction applicable is 20%, which will apply to all the flats above the third floor.

Maharashtra stamp duty: Premium for homes on higher floors with elevators

As builders charge a premium for floor rise, the government also seeks to capitalise on the demand for properties on higher floors. Thus, while giving discounts to buildings without elevators, the government charges higher stamp duty from the flats sold in high-rise buildings with elevators. The premium is linked to the floor and value of the flat and increases for higher floors.
The flats till the fourth floor, are valued at the base ready reckoner rates, whereas, flats between the fifth and 10th floors, are valued higher by five per cent.
The stamp duty value goes up by an additional 5%, for each rise of 10 floors. So, the flats between the 11th and 20th floor, are valued higher by 10%
Likewise, flats from the 21st floor to the 30th floor, are valued higher by 15%.
All the flats above the 30th floor, are valued higher by 20%, for stamp duty purposes.

Maharashtra stamp duty: Rebates for shops

As the value of a shop is dependent on whether the same is facing the road or not, the stamp duty rules allow deduction for shops which are not road-facing.
Road-facing shops are valued at the base ready reckoner rate but the shops that are not facing the road, are entitled to a discount of 20% for stamp duty valuation.
Likewise, smaller shops command a premium in the market and therefore, the rules provide for a discount in value, if the area of the shops exceeds a certain size.
No deduction is available for shops having an area up to 450 sq metre (sqm). For shops having a size between 450 and 700 sqm, a discount of 5% is given.
Shops with an area between 700 and 900 sqm are entitled to a 10% rebate.
The rebate goes up to 15%, for shops with sizes between 900 and 2,300 sqm.
All shops of over 2,300 sqm, enjoy a flat rebate of 20% on the base rate. The discounts are applicable, only for shops situated on ground floors.

Housing.com POV

Stamp duty depreciation helps get a rebate when the property price is less than the market value of the property. While investing in a resale property, check out the age of the property and also definitely find out if depreciation on stamp duty is applicable in the investment. If you understand the benefits of rebates on ready reckoner , you can save quite a lot of money on your stamp duty outgo.

FAQs

What are the benefits of ready reckoner?

It is a benchmark to calculate the stamp duty and registration charges during a property transaction.

Where can I check my Ready Reckoner rate in Maharashtra?

You can log on to IGR Maharashtra and check Ready Reckoner Rate online under the online services. You can also check it offline by visiting the sub-registrar’s office.

How can you know the approximate stamp duty to be paid in Maharashtra?

You can get an approximate stamp duty to be paid by using the stamp duty calculator.

When was ready reckoner rate introduced in Maharashtra?

The Maharashtra government issued its first ready reckoner on January 1, 2001.

Is any fees charged for checking the ready reckoner rate in Maharashtra?

No fees are charged for checking the ready reckoner rate in Maharashtra.

Does ready reckoner have an effect on the property tax?

Yes, ready reckoner rates act as reference point for property tax calculation.

Got any questions or point of view on our article? We would love to hear from you. Write to our Editor-in-Chief Jhumur Ghosh at [email protected]

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