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What is a ready reckoner rate?

The ready reckoner rate is a government-regulated benchmark cost for property transactions in a particular area. It is also known as the circle rate or guideline value and this serves as a reference fact for property valuation and facilitates transparency and consistency in property transactions. 

What is the purpose and importance of ready reckoner rate

1. Regulation of Property evaluation: The ready reckoner rate serves as a standardised procedure for evaluating the property value helping in maintaining uniformity in property transactions across various regions.
2. Estimation of Stamp Duty and Registration Fees: The ready reckoner rate helps in the estimation of  stamp duty and registration fees payable during the purchase or transfer of a property. Stamp duty is a tax paid to the government for the legal recognition of the property transaction and registration fee is the charge paid to the government for registering the property under your name.
3. Prohibiting Underreporting of Property Value: When a minimum value for property registration is set, the ready reckoner rate helps in preventing the underreporting of property values which is a common practice to evade taxes.
4. Generates Revenue: The rate establishes and secures a steady flow of revenue for the government through stamp duty and registration fees. The capital is then used for public infrastructure and other development projects.

4 Factors that influence the Ready Reckoner Rates-

1. Location: The rates vary notably based on the area of  the property. Properties in prime locations attract higher rates in comparison to the properties in rural, suburbs, or developing regions. 
2. Type of Property: Based on the type of properties- residential, commercial, industrial, or agricultural, the rates vary for each one of these. Commercial properties usually have higher rates as compared to residential properties.
3. Infrastructural development: Properties that feature better infrastructure like well connected roads, schools, hospitals, and public transport, tend to have higher ready reckoner rates. Properties that have better amenities also attract a higher reckoner rate.
4. Market Trends: The real estate market trends in a particular area also influence the ready reckoner rates. If there is a boom in the real estate market, the rates might be adjusted upwards.

Process of Setting Ready Reckoner Rates

1. Studies through survey and data gathering: The governing authority conducts surveys in periodic intervals and accumulates data on property transactions in various regions to evaluate the prevailing market rates.
2. Evaluation by Authorities: The concerned authority i.e. the local government wings like the revenue department or municipal corporation, analyse the facts and regulate the ready reckoner rates according to different areas and category of properties.
3. Declaration and Analysis: The determined rates are published officially online and offline and are accessible by the public. The rates are reviewed from time to time and revised based on changes in the real estate market and economic conditions.

FAQ

Conclusion

The real estate sector cannot function without the ready reckoner. It ensures regulation in property valuation, helps in preventing tax evasion, and yields a reliable revenue generation for the government. Moreover, it is an essential tool for maintaining transparency and fairness in property transactions.