The ready reckoner rate is the base worth of property set by the government, based on which property exchanges happen. A transaction value of lower than 10% or more could lead to tax burdens on the buyer and the seller. Ready reckoner rates specify the minimum value that properties can be sold at; however, there are no maximum values specified.
This is the market rate that helps determine the registration fees and stamp duty the buyer will have to pay. In each locality, there is a significant difference in amount between the ready reckoner rates and the prevailing market rates. Real estate transactions in India are usually based on the prevalent market rate and not on the ready reckoner rate.
A large difference between the ready reckoner rate and the market rate leads to a revenue loss for the government. When the ready reckoner rate is higher, the registration fees and stamp duty on property are calculated based on it. However, higher ready reckoner rates are often a determent, discouraging investors from going ahead with the registration of their property.
State governments periodically review the ready reckoner rates of localities and effectively bring them closer to the current market rates. This increases the transparency in property transactions, also ensuring that the local authorities do not experience a loss of revenue. The ready reckoner rates in a locality will give the home investor an idea of the cost of property there.
The market rates of property are always higher, and these increase if the ready reckoner rates are expected to increase. Investing in property in a locality where the difference between the two rates is smaller is advantageous to the buyer. The prevailing ready reckoner rates in a particular area can be easily ascertained by checking your respective state government websites.
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