Ready Reckoner Rate, also known as Circle Rate or Guidance Value, is the standard value of an immovable property assessed and regulated by the respective State Government in which the real estate is established. Here, “immovable property” refers to commercial property, residential property and plot/land.
Each passing year, State governments publish new and updated Ready Reckoner Rates based on different areas of the state. However, one thing to note here is that the rates mainly differ across states, cities or localities. Moreover, the Circle Rate or Ready Reckoner Rate near Delhi, Mumbai or any other city depends on multiple factors. Below this predetermined benchmark, which is set for a locality, no real estate transaction is eligible to take place. This shows that RRR is the minimum rate on the basis of which the government charges stamp duty and registration fee for any real estate transaction.
Stamp duty is calculated on the actual value of the transaction or Ready Reckoner Rate, whichever is higher. For example, you intended to purchase a property with a RRR of Rs. 6000 per sq. ft, and the property has a valuation of Rs. 5000 per sq. ft. you’ll have to do all the formalities like registration fees and stamp duties with respect to RRR as it is higher than the actual or market price.
Again, there are some areas where RRR is generally less than the current market value of particular properties. However, to keep it closer to the market rate, RRR is revised yearly. For example, Ready Reckoner Rate Pune is decided by the Pune Chinchwad Municipal Corporation and revised periodically.
Calculation of Ready Reckoner Rate
As stated above, the Ready Reckoner Rates are pre-decided by the State Government and used as minimum values for real estate transactions in a place. For better understanding, let’s have a look at an example:
Suppose you wish to purchase real estate like a residential flat in Mumbai, and the place has a stamp duty of 5%. Based on the Ready Reckoner Rate set by the government of Maharashtra, the property valuation comes to Rs.50 lacs. At 5%, Stamp Duty is calculated at Rs. 2.5 lac. However, if the actual purchasing price of the residential flat is Rs. 70 lakh, you’ll have to pay a Stamp Duty of Rs. 3.5 lac.
Here, it is to be noted that if you would have purchased the property at Rs. 40 lakh, making the Stamp Duty 2 lac, you would have to pay a minimum amount, i.e. Rs. 2.5 lac, as per the minimum value of the real estate set by the government of Maharashtra or Ready Reckoner Rate).
Importance of Ready Reckoner Rates for Homebuyers
In general, it is always good when the Ready Reckoner Rate or Circle Rate of any state is below the market value or aligned with it. Furthermore, it also benefits both the buyer and the seller and helps revive the demand in the real estate market.
When it comes to the importance of RRR, it has a major impact on the homebuyers who are willing to buy any immovable property in a particular area. Ready Reckoner Rate near Delhi or any other place helps the buyer understand the standard property rate of that particular area. Also, this gives the homebuyers the idea of how much higher than the price are they paying while making the real estate investment.
Apart from this, as the market rate is always more than the Ready Reckoner Rate, it is highly advisable to purchase any real estate where the gap between the Market Rate and RRR is low. It will also help you as a homebuyer to get more profit by reselling the property because the market rate will go up once the RRR increases. In this regard, a minor gap between the two would also help the homebuyers while opting for adequate home loan finance.
Frequently Asked Questions (FAQs)
1. What is the Circle Rate or Guidance Value?
Circle Rate or Guidance Value is the lowest value at which a real estate can be registered. In Maharashtra, it is also known as Ready Reckoner Rate.
2. Who sets RR rates?
Land or plot being a State subject, the power to set RR rates lies with the State Government.
3. How many times Ready Reckoner Rates are revised in a year?
Typically, any State in India can revise the Ready Reckoner Rates once a year.
4. Are RRR the same for every area in one city?
RRR varies from one area to another in a city.
Also read: Online Property Registration Details and Documents