PROPERTY transactions in the national capital are all set to become a costly affair with the Delhi Cabinet on Tuesday deciding to enhance the current circle rates for sale and purchase of property by 100% with an aim to improve fiscal health of the state exchequer.
The new rates will be notified soon, chief minister Sheila Dikshit told reporters soon after presiding over the Cabinet meeting. This is for the first time that the circle rates have been increased after they were first introduced in the Capital.
The circle rate of properties is the system in which the government fixes the minimum or maximum rate of the land depending on the category of colonies it falls in. The chief minister said that a decision to increase the existing circle rates was taken in order to mitigate the black money circulation in property transaction in Delhi. The circle rates were first introduced in Delhi in 2007, dividing the Capital into eight categories, and were notified under the provisions of the Delhi Stamp (Prevention of Undervaluation of Instruments) Rules, 2007 on July 18, 2007.
Ms Dikshit said the revision in circle rates will help in curbing the prevailing undervaluation of properties. The neighbouring states of Uttar Pradesh and Haryana have been enhancing circle rates in respect of Noida and Gurgaon very frequently. “In view of prevailing actual market rates in Delhi and in other NCR towns, it was felt appropriate to reasonably rationalise existing circle rates. The new rates will come into force after issue of notification very soon,” a senior government official said.
Buyers will now have to pay more to own real estate in Delhi with the minimum price at which properties are registered being doubled across the board on Tuesday. The redeeming factor, however, is that the revised circle rates are up to a third less than what revenue officials had proposed for the Cabinet’s approval.
The new circle rate ranges from Rs 13,800 per square metre to Rs 86,000 per square metre across the eight categories into which the city is divided. Properties are sold at varying rates, even within a colony, so the government uses circle rate as a uniform measure to calculate its value on which stamp duty and registration fee is charged. In June, the Cabinet had approved different circle rates and parameters for calculating it, but later decided to reconsider the decision after bureaucrats warned about legal hassles.
Chief Minister Sheila Dikshit said the new rates will be notified soon and enforced. She said the circle rates have been increased to keep pace with satellite towns like Gurgaon and Noida where they have been consistently increased to reduce the use of black money in the property market.
A senior revenue official said, “Our revenue collection was unreasonably low as the existing circle rates hadn’t been changed for three years, when they were first enforced, while actual market rates have soared since.” Most buyers pay the price of the property they buy in two parts, one calculated on circle rate that they pay in white and the balance in black, added another officer. Colonies are classified into eight categories to calculate circle rates under the unit area method that was formed by the Municipal Corporation of Delhi in 2007 for charging the annual property tax. The revision proposal tabled for the Cabinet’s approval on Tuesday, and which was eventually rejected, sought to more than triple the rate in some colonies, said a senior revenue official. If the proposal was cleared, circle rates would have ranged between Rs 9,000 per square metre and Rs 1.25 lakh per square metre.
“It also created categories for posh colonies that were to have the maximum circle rates. These colonies would have seen the steepest rise had the proposal been approved,” said an official. The proposal also sought to change the existing categorisation of colonies as per the unit area method and divide the city into 2,480 localities with varying circle rates, which the bureaucrats warned would be bad in law. “How can we put the same colony in one category to charge property tax and in another to calculate stamp duty and registration fee? Anyone could have moved the court against it”.
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