Is the Delhi govt losing crore a month?
Revenue losses likely as agriculture land deals are done at market rates, even though buyers claim to have paid circle rate prices to save stamp duty
It’s a simple move that can help the Delhi government save revenues of at least ₹ 300 crore a month, say senior officials in the state’s revenue department. Low circle rates ( the minimum prices fixed by the government for sale of property for collecting stamp duty) encourage people to sell properties at prevailing market rates, take the money in black and declare the rest in white as per circle rates. That there is a vast difference in circle rates in Delhi is evident from the fact that agriculture land is priced at ₹ 53 lakh per acre whereas the current market price varies between ₹ 2.5 crore to ₹ 50 crore per acre.
In February this month, Mohit Sharma (name changed), a resident of Gurgaon, bought 12 acres of agriculture land i n t he K- I I zone of Delhi, which comes under the Delhi Development Authority’s (DDA) proposed land-pooling zone. The actual cost of land, when calculated at the market rate of ₹ 12 crore per acre, was ₹ 144 crore. However, the sale deed which the land owner (a farmer) executed in favour of Jain mentioned a price of just ₹ 6.36 crore – which was paid by Jain in cash. The rest of the payment was in black.
Going by the actual transaction, Jain would have had to pay ₹ 8.64 crore as stamp duty, but he paid just ₹ 38 lakh for the amount in white. The money he saved on the transaction was about ₹ 8.26 cr – which would have otherwise gone to the Delhi government.
“The state government’s revenue department collects 6% of the cost of property as stamp duty. When circle rates are low, buyers and sellers in most cases declare property prices around such rates and not the actual sale price because that means they pay minimum stamp duty. The ultimate loser in the whole transaction is the government,” says a revenue officer posted in Kapashera in south-west Delhi.
Officers posted at various revenue districts in south-west, south and north Delhi areas, where a huge chunk of agriculture land still exists, come out with startling revelations of black money transactions.
“Not just in the land-pooling zones, but also in many south Delhi areas such as Asola, Dera, Fatehpur, Sultanpur, Ghitorni etc the price of farmhouses vary from ₹ 15 cr per acre to ₹ 50 cr per acre but sale-deeds just mention a transaction price of about ₹ 70 lakh because farmhouses are categorised as agriculture land,” says Vijay Kumar, property dealer in Chhattarpur.
About how he arrived at the loss figures of ₹ 300 crore to ₹ 500 crore, the revenue official says: “Our average monthly income through all forms of land deals is about ₹ 200 crore. Ten per cent of this revenue, that is ₹ 20 crore, comes from the sale-purchase of the agriculture land, the circle rate of which is ₹ 53 lakh per acre now. If this rate is increased in three to four categories according to the prevailing market prices in various areas, the average circle rate will be around ₹ 10 crore per acre. This amount is 20 times more than the existing circle rate. So the monthly revenue collection from the sale-purchase of agriculture land will also shoot up 20 times to ₹ 400 crore (20 x ₹ 20 crore),” says the official.
Now the question is, when the revenue department is aware of the revenue loss due to the unrealistic circle rates, why are the rates not being hiked? A senior government revenue official reveals that in September 2014, when circle rates of various properties were increased in Delhi by Najeeb Jung, lieutenant governor, a proposal was made to do the same for agriculture land. “We had drawn the attention of the LG to the problem and