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Pune: According to a State government notification, the ready reckoner rates in the State will see no increase this year, after seeing the lowest increase in reckoner rates last year. The construction industry is calling this decision historic and important. Industry experts say this will benefit in lowering real estate rates.

“Ready reckoner rates are decided based on assessments of property value by the State government. On the basis of this rate, the stamp duty and registration charges are decided,” said Shantilal Kataria, President of Confederation of Real Estate Developers’ Associations of India (CREDAI). He said that the system of calculating the rates was not proper. He said, “The way in which the government has been calculating the rates is highly unscientific and non-transparent.”

Welcoming the decision, developer Satish Magar said, “This is a very good decision. The reckoner had pushed the prices of real estate upwards. After the problems of last year, it is a relief,” adding, “I would now go a bit further and say that the government should reduce the reckoner rates further for affordable housing projects.”

“CREDAI Maharashtra congratulates the government for keeping the same ASR rates of the year 2017/18 for the year 2018/19,” the official statement of CREDAI said. CREDAI has also mentioned that the Maharashtra government, for the first time in eight years, has not changed the indicative prices of properties in the ready reckoner. “In 2009, the then revenue minister Late Shri Patangraoji Kadam took the same decision,” the statement said.

CREDAI also urged the government to make the system more transparent. “Now, with a new provision incorporated by way of amendment in Stamp Act, the government can even reduce ASR rates. They should search such transactions where ASR rates are still unnecessarily more than real transactions and reduce the same by applying new provisions of the act,” the statement said, adding, “To further increase stability and boost confidence amongst property buyers, we urge the government to change ASR rates once in three years only.”

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What are Ready Reckoner Rates and what they mean for home buyers?

What are Ready Reckoner rates?

These rates are the prices of the residential property, land or commercial property for a given area and is published and regulated by the respective state government. These rates are regularly revised on a yearly basis depending on the perception about the government for such price revisions.

Therefore, a homeowner or buyer would be required to pay the stamp duty or registration amount, not below such stated ready reckoner rates or the actual price of the property, whichever is higher.

Example – A house property in a certain area has a ready reckoner rate of Rs. 50 lakhs, while the builder has demanded the price of Rs. 60 lakhs. In this case, a homebuyer would have to pay stamp duty on Rs. 60 lakhs only, as it being a higher price.

How Ready Reckoner rates are important for home buyers?

In short, the ready reckoner rates are nothing but fair value price for a property set by the state government, where the builders have the freedom to charge premium over and above such rates. Clearly, it shows that a person will have to pay a value much higher to own a house over and above the reckoner rates. Therefore, if a state government revises such rates then it means that a home buyer would have to pay more than before. The ready reckoner rates serve as the biggest revenue source to the state governments. For instance, the Maharashtra State government has recently declared to hike ready reckoner rates, which will make properties altogether very expensive for buyers.

Benefits of buying a house in your wife's name

What’s the biggest advantage of buying property in your wife’s name? Pleasing her, impressing the family, being seen as a trendsetter in a patriarchal society? Yes, there is all that, but the icing on the cake is that you might shave off 1-2% of the property value. Several state governments offer women buyers a discount on stamp duty as a part of social initiatives (see graphic). Stamp duty is the tax paid to the state government when you buy a property and get it transferred in your name. In Delhi, for instance, a woman needs to pay a stamp duty of 4% compared with 6% for men.

This benefit of lower stamp duty can be availed of even when the property is gifted to the spouse. Here’s how this benefit is extended to women.

• Discount on stamp duty charges
Several state governments in north India are now offering a partial waiver on stamp duty, for buyers registering properties in a woman’s name – either as a sole owner or as a joint owner.

If it’s not possible to buy a property in your wife’s name, consider joint registration. Some states, including Delhi, offer a 1% discount on stamp duty in such cases. According to Mayur Shah, director, tax and regulatory services, Ernst & Young, there are some legal and tax benefits in purchasing a second property jointly with your wife. “If the wife is a co-owner, she can claim a deduction of up to Rs 1.5 lakh for the interest paid on a home loan in case of self-occupied property,” says Shah

• Discount on home loan interest rates

Many banks like SBI, ICICI and HDFC Bank, offer discounted rates on home loans for women borrowers.

• Taxation

As for wealth tax, the asset is treated as net wealth in the hands of the spouse who owns the property. To get the maximum benefit from this incentive, remember that simply registering the property in the name of the wife won’t be enough. The provisions of the domestic tax law in India, according to Shah, state that the income earned directly or indirectly by the wife from assets transferred to her will be clubbed with the income of the husband.

This means that if you buy a house in your wife’s name, but she does not contribute monetarily to the purchase, the rental income from this property will be treated as your income and taxed at the applicable rate. One way of circumventing this is to give a ‘loan’ to your wife. So, if you lend her Rs 50 lakh, she can later transfer jewellery worth this amount in your name.

• Other tax benefits

Here’s how to reduce your tax liability:
If the husband incurs business debt or loss, the house that is registered in the wife’s name cannot be attached to cover the loss.

Joint ownership can be beneficial if both the spouses take home loans as each can claim tax deduction for the interest paid on loan.
In case the husband already owns many assets, registering the house in his wife’s name will reduce his wealth tax liability.

• Things to keep in mind when buying a home in the wife’s name

Experts maintain that it is a good idea to buy a home in the name of one’s wife or in co-ownership. However, the wife can enjoy the tax benefit, only if she has a separate and genuine source of income. Moreover, if there is any legal dispute on the property, then both, the husband and wife, will be involved in the case. Therefore, home buyers should evaluate all possibilities, before making a final decision.

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