Re­vised cir­cle rates in Delhi

An in­crease in cir­cle rates does not nec­es­sar­ily mean a pro­por­tion­ate hike in prop­erty prices

HT Estates - - Front Page - Su­nil Tyagi

Un­der­val­u­a­tion of prop­er­ties is a sig­nif­i­cant fac­tor con­tribut­ing to cir­cu­la­tion of black money and avoid­ance of stamp duty. To curb the prac­tice of heavy un­der­val­u­a­tion of trans­ac­tions of im­mov­able prop­erty, state gov­ern­ments pe­ri­od­i­cally fix and re­vise cir­cle rates. Cir­cle rates are the min­i­mum rates for val­u­a­tion of im­mov­able prop­er­ties. The rates are taken into con­sid­er­a­tion by the com­pe­tent reg­is­ter­ing au­thor­i­ties at the time of reg­is­tra­tion of doc­u­ments re­lat­ing to trans­ac­tions of im­mov­able prop­er­ties.

Re­cently, the Delhi government re­vised the cir­cle rates for prop­er­ties in Delhi un­der the In­dian Stamp Act, 1899, as ap­pli­ca­ble to Delhi and Delhi Stamp (Preven­tion of Un­der-val­u­a­tion of In­stru­ments) Rules, 2007. The re­vised cir­cle rates came into ef­fect from De­cem­ber 5, 2012, and have su­per­seded the rates last pre­scribed by the Delhi government in Novem­ber 2011.

The cir­cle rates ap­pli­ca­ble to a par­tic­u­lar prop­erty de­pend on var­i­ous fac­tors. For in­stance, cir­cle rates dif­fer de­pend­ing on whether the pre­scribed us­age of the land/prop­erty is res­i­den­tial, com­mer­cial, in­dus­trial or any other. In Delhi, cir­cle rates are much higher for com­mer­cial and in­dus­trial land as com­pared to res­i­den­tial. The rates also dif­fer on the ba­sis of which cat­e­gory of lo­cal­ity the prop­erty is sit­u­ated in. In Delhi, the government has di­vided all lo­cal­i­ties into eight cat­e­gories, rang­ing from Cat­e­gory A to H. Each cat­e­gory has a dif­fer­ent cir­cle rate — the more af­flu­ent ar­eas of Delhi have higher rates as com­pared to the less­de­vel­oped ar­eas. Within a year, cir­cle rates of land in cat­e­gory A prop­er­ties have tripled from the pre­vi­ous rate of R2,15,000 per square me­tre to the cur­rent rate of R6,45,000 per sq m, whereas cir­cle rates of other cat­e­gories have also in­creased but not in such high pro­por­tion as in aat­e­gory a prop­er­ties (re­fer to the ta­ble for re­vised cir­cle rates for res­i­den­tial land in Delhi).

Cir­cle rates also pre­scribe the min­i­mum rate of con­struc­tion for as­cer­tain­ing the min­i­mum val­u­a­tion of built- up prop­er­ties (on per square me­tre ba­sis). Th­ese rates de­pend on the cat­e­gory of lo­cal­ity, whether the prop­erty is be­ing used for res­i­den­tial or com­mer­cial pur­pose, the year of com­ple­tion of con­struc­tion and the qual­ity of con­struc­tion (whether pucca, semi-pucca or kutcha). As for flats in Delhi, the min­i­mum value of built-up rate varies de­pend­ing on whether a flat is in a DDA/ co­op­er­a­tive/ group hous­ing so­ci­ety or whether it has been devel­oped by a pri­vate builder. The min­i­mum built-up rate for flats devel­oped by pri­vate builders is higher com­pared to flats in DDA/ co­op­er­a­tive/ group hous­ing so­ci­eties. Ad­di­tion­ally, the min­i­mum built-up rate for flats in build­ings hav­ing more than four storeys is greater than min­i­mum built-up rate for flats in build­ings that are up to four storeys high.

An in­crease in cir­cle rates does not nec­es­sar­ily mean an equiv­a­lent pro­por­tion­ate in­crease in prop­erty prices. How­ever with the lat­est hike, an av­er­age buyer will no doubt have to bear in­creased costs to­wards stamp duty and reg­is­tra­tion fee. Given the wide gap be­tween ac­tual mar­ket rates and pre­vi­ous cir­cle rates, th­ese new cir­cle rates will help cur­tail the cir- cu­la­tion of black money in real es­tate trans­ac­tions. More­over, the new cir­cle rates will in­crease trans­parency in such trans­ac­tions as well as add to the rev­enue of the state.

THINKSTOCK

Af­ter the lat­est rise in cir­cle rates, an av­er­age buyer will have to shell out more money as stamp duty and reg­is­tra­tion fee in Delhi

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