Maharashtra cuts fine on government plots transferred without nod

The Maharashtra government has decided to reduce the penalty it charges on properties built on state land, but transferred or sold without permission — a move likely to come as relief to residents of nearly 3,000 cooperative housing societies in Mumbai.

The state’s revenue department, in an order issued on Friday, said it was reducing the penalty to 3% to 5% of the ready reckoner rates of the property, if it was sold or transferred without the collector’s approval. This means a lower penalty to regularise illegal transfer and sale.

The ready reckoner rate is a guide to property rates.

Earlier, when such flats were sold without the collector’s nod, those involved would have to pay a penalty double the transfer fee. For example, if the transfer fee of a 500 sqft flat was ₹1,000 per sqft, the penalty would be double that amount. This would work out to a transfer fee of ₹5 lakh and a penalty of ₹10 lakh.

Why the move? The state had allotted several prime plots to housing societies meant for serving and retired bureaucrats, police officers and judicial officials in and around Mumbai at subsidised costs, and under certain norms. The sale of such flats, however, is governed by certain guidelines including the collector’s approval before the flat is transferred or sold, and the payment of a transfer fee.

Under the new order, if a flat was sold without the collector’s approval within five years of the owner getting the occupation certificate, the charges would be 5% based on the flat’s ready reckoner rate at the time of the transaction, not when the irregularity comes to light.

It will be 3% of the ready reckoner rate if the flat is sold after five years.

Currently, for the city, the state charges a maximum transfer fee of Rs1,000 a sqft, or 3% of the cost of the property, as per the existing ready reckoner rates, or whichever is more. For the suburbs, the transfer fee is a maximum of Rs500 a sqft or 3% of the cost of the property under the existing ready reckoner rates, or whichever is more.

The transfer fee will be in three slabs, depending on whether the flat was sold within five, 10 or 15 years. The immediate sale of such a flat within five years has the highest transfer fee, and the hence penalty.

In July 2017, the state revenue department decided to modify its norms to regularise illegal transfer and sale of such flats by charging double the transfer fees. But, in less than a year, and after several complaints, government officials said they were forced to withdraw the move.

“We found people were unable to pay charges as they were too steep. They would have to pay double the transfer fees, and that too based on the current ready reckoner rates,” said a senior official from revenue department. “The state government has received many complaints and many elected representatives too have requested the state to reconsider its decision,” the official admitted.