Maharashtra budget: Premium FSI to make homes in Mumbai more expensive
State Finance Minister Sudhir Mungantiwar announced in his budget on Wednesday that rates for premium FSI would be linked to the newly hiked ready reckoner rates; the government had frozen rates of premium FSI in 2008
Buying a new home? Brace yourselves; you will have to pay more. Developers who purchase premium floor space index (FSI) for constructing taller buildings will now have to pay the state government as per the current ready reckoner (RR) rates from April.
The hiked premium will also affect those who bought homes earlier, since builders have been asked to pay dues from 2008. The government had frozen the rate of premium FSI in 2008.
This means developers continued to pay as per the rate in 2008. The new premium will be linked with the 2015 RR rates, which were hiked recently. FSI denotes the total built area on a plot of land. An FSI of 2 means that the area of construction should be double the area of the piece of land.
State Finance Minister Sudhir Mungantiwar made the announcement while presenting the state budget on Wednesday. The budget showed a revenue deficit of Rs 3,757 crore, which the government needs to recover by way of new taxation.
When asked, Chief Minister Devendra Fadnavis dismissed fears that the extra premium would increase real estate prices. “We enhanced the premium because builders were pocketing the money earned from constructing more saleable space.
We want that the state too earns revenue,” he said at a post-budget press conference. Fadnavis expected the state to earn at least Rs 4,000 crore per year. Respective municipal corporations would be given half of the premium amount earned.
However, a real estate developer who discussed the issue with mid-day said they would definitely recover their ‘outgoing’ from the homebuyers. “The rates will go up definitely and the hike will be in accordance with the amount the respective developers spend,” said a senior reputed builder from the city, asking not to be identified.
But Fadnavis assured that a housing regulator (authority) would be appointed soon to check errant developers. The state has sorely lacked a regulatory authority in a market that is completely driven by realtors, and not by buyers.
He also added that the developers who build affordable housing would not pay any premium. He said the builders would have to pay dues since 2008, because they had sworn on affidavits that they would pay up whenever the premium rates are hiked.
LBT scrapped, octroi to stay
Bete noire of local traders and businessmen, the local body tax (LBT) will be abolished by the state government by August 1. Mumbai will continue to have the octroi regime. The state is also planning to levy a surcharge on VAT; this means Mumbaikars will pay the surcharge as well as octroi.
Chief Minister Devendra Fadnavis said a system was being put in place to avoid double taxation in the city. Octroi will continue till the central Goods and Services Tax (GST) comes into effect by next year. The state will need to raise R6,800 crore to give to civic corporations where the LBT will be abolished.