By “Circle Rate’ is the minimum rate notified by the government through the registrar or sub registrar office of Delhi, for registration of property transactions. Stamp duty is to be paid on higher value, be it the declared transaction value or the value calculation as per circle rate chart applicable in that location. The impact of reduction of 20 per cent in circle rate is expected to reduce stamp duty or registration charges by nearly 1 per cent. This will incentivize property deals in Delhi, and will help fence sitters to convert into actual homebuyers, thus give a big boost for real estate in Delhi by increased number of transactions. The move will help sell property in certain localities where the market rate is lower than circle rate.
“The move,” “apart from overall market sentiment, will also positively impact property transactions in Grade A micro markets, where there is a mismatch between the circle rate and market rate. This is similar to what was seen during the Covid-19 pandemic, when vacancy rates went up and occupancy rates came down. The intent of the Delhi Government’s move appears to be to fuel demand. The other side of the move is that more quantum of transactions will boost overall revenue collection – the Delhi Government’s revenue collection target from property registration for 2021 is Rs. 5,300 crore,”
The decision also appears to be linked with the tax relief for homebuyers and developers who are looking at transactions below circle rate by up to 20 per cent. This has been extended in Budget 2021. Effectively, by bringing down the circle rate, the Delhi Government seeks to create a conducive environment for accelerated housing transactions in the national capital market, as also help in giving a boost to the state’s economy post the coronavirus pandemic.
Dr. Niranjan Hiranandani, National President, NAREDCO
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