Source: Hindustan Times

The new minimum rates for sale and purchase of property in different areas of Delhi will make it easier for people to buy homes, reduce the black-money component in real-estate deals, and generate more revenue for the government. But property prices in the city are not likely to change much, according to experts.

The Delhi cabinet cleared the ‘circle rates’, as the minimum rates are called, on Monday. These will come into effect once the notification, expected in a
week, is issued.

The circle rates, which will not be revised for the next five years, will bring more white money into real-estate transactions and thus reduce tax evasion, said bankers. Home seekers will also get bigger loans from banks.

Madhumita Ganguly, senior general manager, HDFC, said: “Depending upon the repaying ability of the borrower, banks can now finance a substantially larger part of the real price of any property. Earlier the seller would want a major portion of the payment for a property in cash, which banks will not provide.”

In most property deals in Delhi, the amount paid in cash — usually unaccounted — is between 40 and 60 per cent of its total value.

Chief Minister Sheila Dikshit said the circle rates would simplify assessment of stamp duty, and bring transparency and efficiency into the process of registration. "It has been decided to adopt a reasonable option which makes circle rates rational and below the existing market rates. The rates approved are much lower than the prevailing rates of adjoining areas like Noida," Dikshit told reporters after the cabinet meeting that cleared the rates.

Property tax consultant Brig H.K. Dhawan said the rates were reasonable, but much lower than the market prices. "The rates, though quite reasonable, are on the conservative side. However, government revenue from property deals will increase because the black money component of the transactions will reduce," Dhawan said.

Revenue Minister Raj Kumar Chauhan said the government would earn an additional Rs 500-600 crore per annum. "Stamp duty evasion will practically end," he added.

Cushman & Wakefield's Verma agreed that tax evasion would decline. "However, the government needs to institutionalise the mechanism so that these rates are reviewed after every two years," he said.

People who have still not been able to buy a home hoped the circle rates would keep speculators at bay. "With the white-money component being increased, speculators will be reluctant to invest so much money in the real estate market," said Sunidhi Gupta, who works with a private company in Connaught Place.


The Delhi government had announced in its annual budget that circle rates, which are area-based minimum rates, will be introduced for the registration of properties which is supposed to bring higher transparency. The city has been divided into A (the highest) to H (the lowest) categories according to the unit area method of property tax evaluation. The rates would vary from Rs. 6,000 to Rs. 43,060 per sq. metre from H to A upwards. The amount one should pay as stamp duty for registration will be the sum of land cost and construction cost. The land cost will be determined by factors like circle rates and the floor on which the property has been bought.
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  • Delhi to face slump in property prices!

    With introduction to the ‘Circle Rates’, real estate market of Delhi is expected to see an immediate slump. Realtors in the National Capital Region (NCR) hope this will make investors look more at the suburbs.

    Circles rates are already effective in NCR areas, and with Delhi joining the ranks there is likely to be a short-term slump in Delhi’s real estate market as the flow of “unaccounted for” money will stem somewhat.

    Most of the realtors on this decision of govt. are taking a slump in property market of Delhi as inevitable as high-end buyers and big realtors are more comfortable trading in cash. People who can afford to pay more in black will now have to pay more in white. Registration fees will thus be higher.

    Buyers may be walking to NCR also, where prices are lower in comparison to that of the capital, where in spite of circle rates applicability, the amount one has to pay in white will be less than what one has to pay legally for a property in Delhi.

    When circle rates were first introduced in Faridabad in 1991-92, the real estate market there saw a similar trend to what experts are now predicting in Delhi. Harish Arora, who owns Link Estates in Faridabad, said the market was stable when circle rates were introduced, like the present Delhi market.
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  • circle rates

    quote circle rate in connaught place middle circle
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