The new circle rates will curb black-money in real estate transactions
Circle rates basically lay down the minimum valuation of land and immovable properties. Circle rates, as and when revised and notified by the relevant state government, are taken into consideration by the competent registering authorities at the time of registration of instruments relating to land and immovable properties.
Circle rates for the national Capital were last revised by the Delhi government on February 8, 2011. Recently, the government once again revised circle rates under the provisions of the Indian Stamp Act, 1899, as applicable to Delhi and the Delhi Stamp (Prevention of Under-valuation of Instruments) Rules, 2007. The intention of the government in revising circle rates is to mitigate and curb the practice of heavy undervaluation of property prices, which results in circulation of black money and avoidance of stamp duty.
Though circle rates are laid down as standards that are to be uniformly followed by all in their transactions of immovable property, the quantum of circle rates applicable depends on various factors.
For instance, circle rates differ on the basis of whether the prescribed usage of the land is residential, commercial, industrial or any other. In Delhi, circle rates are much higher for commercial and industrial land as compared to residential. Also, circle rates vary depending on the locality the immovable property is in.
Taking factors like development, prices, infrastructure etc into account, the government in Delhi has categorised each locality under eight heads from A to H. Each category has a different prescribed circle rate, where posh areas have higher circle rates than others.
Furthermore, in Delhi, the minimum value of the built-up rate is also determined by where the flat is: in a DDA/ cooperative/ group housing society or in a multi-storeyed building developed by a private builder. The minimum value of the built-up rate is much higher for multistoreyed flats developed by private builders as compared to multi-storeyed flats in DDA/ cooperative/ group housing societies.
For an average person looking to invest in an immovable property, this latest hike in circle rates will translate into increased costs as he/she will have to pay a higher amount towards stamp duty and regVIPIN KUMAR istration. However, buyers should not panic as the proportionate increase in circle rates does not mean an equivalent increase in property prices. Just because there has been a 25% hike in one area does not mean property prices too will go up there by the same percentage.
However, though property prices may go up because of the hike, this revision is a welcome move. Given the significantly wide gap between actual market rates and previous circle rates, the new rates will act as a better check on the black-money component of real estate transactions. It will also help increase transparency in transactions of immovable property and add to the state's revenue.
