What is ready reckoner rate meaning? The ready reckoner rate is a standard value assessed and regulated by the state government of real estate property like commercial property, land, and residential property. Every year, the state government updates ready reckoner rates based on a different area of the state. These rates vary according to state, location, and area. Keep reading this article to know about the ready reckoner rate, RRR meaning, factors that affect it on demand, and many more.
Ready Reckoner Rate Impact on Real Estate Transactions
Although there is a fixed minimum and regulation selling price of the property, it does not have a minimum price limit to sell. In India, many properties are sold at a rate that is great than RRR. For instance, the RRR may be set at a specific price, but the actual transactions take place at a rate more than the ready reckoner rate in Mumbai.
The market price at what the client agrees to pay for a specific property that is higher than RRR. And when the market rates are, buyers end up paying more from their pocket. Now the issue is that to save stamp duty money and taxes, the people show prices less than the actual value and keep it close to RRR.
What Affects the Ready Reckoner Rate On Demand?
The state government gathers the stamp duty fee or registration fees based on the market rate or ready reckoner rate, which is higher. These charges are transaction values that buyers need to pay to buy property. This rate differs from state to state.
For instance, some of the states in India have a higher value of 8-10% of the total transaction amount. It is impossible to find an area that has a low market rate than the ready reckoner rate. In this case, the paid price by the buyer is less than RRR, and the buyer needs to do all formalities based on the set RRR. It leads to an unwanted scenario as buyers need to pay additional stamp duty than the price. Also, the seller will end up paying capital gain tax on the property.
What Is the Effect of Selling Properties At A Low Rate Than RRR?
Based on government rules, while buying property, the buyer is required to pay less amount of stamp duty, which is known as the circle rate or ready reckoner rate. If the transactions occur at less price than RRR and if the gap occurs is 105 or less than the standard area rate, then the seller and buyer end up paying the penalty. It will make the burden of tax on people. As per the income tax Act, selling property at a low price than RRR will cause a penalty on both parties.
Where And How to Find Ready Reckoner Rates?
To buy a real estate property, you are required to know about the ready reckoner rate. You can check the websites of the government to check the RRR of a specific area. To keep updated with market trends and rates, governments are improvising after some time.
Conclusion
The market rate at which the buyer buys the property is higher than the ready reckoner rate. Before buying any property, it is suggested that people to update the RRR.