News: Home prices can't fall until states drop circle rates-June 10, 2020

Unless the Maharashtra government drops the circle rates or what are called ready reckoner rates (RRR), there’s little room for property prices in Mumbai to fall meaningfully. So, while Union commerce and railways minister Piyush Goyal has been exhorting builders to clear inventory by lowering prices, this can’t happen for most localities in the city unless the state government reduces the circle rates.

For instance, the difference between the market value and the RRR in Lower Parel is just 6%, while in Worli it is 8%.This then limits the extent to which builders can drop prices because as Niranjan Hiranandani, MD, Hiranandani Group points out, selling below RR rates attracts a penalty under Section 43CA of the Income Tax Act. “Both the buyer and the seller have to bear a 35% penalty if a property is transacted at below 10% of the RR rates,” Hiranandani told FE.

Source: Financial Express  June 10, 2020 12:01 AM                                  Posted by Jascon.- Making Real Estate Easy