Monday, September 29, 2014

Will increasing property circle rates in Delhi stop black money transactions? We believe….No

Author: Sachin Gupta | Find me on Twitter

Delhi Government has increased the property circle rates across all categories of colonies. The change in circle rates has been effected from 23rd September 2014. The increase in circle rates has been a whopping 20%. What are circle rates? Circle rate is the minimum property price set up by the local government to calculate stamp duty and registration charges for any property transaction within the city.

Here are the new circle rates for Delhi:

New Circle Rate for Land (in  Rs/Sq.Mt.) Stamp Duty @5% for Joint Holding (in Rs) Old Circle Rate for Land (in Rs/Sq.Mt.) Stamp Duty @5% for Joint Holding (in Rs) Differential (in Rs) Increase in stamp duty 100 Sq Mt  plot (in Rs) Increase in stamp duty 300 Sq Mt plot (in Rs) Increase in stamp duty 500 Sq Mt plot (in Rs) Increase in stamp duty 1000 Sq Mt plot (in Rs)
Category A 774000 38700 645000 32250 6450 645000 1935000 3225000 6450000
Category B 245520 12276 204600 10230 2046 204600 613800 1023000 2046000
Category C 159840 7992 133224 6661.2 1330.8 133080 399240 665400 1330800
Category D 127680 6384 106384 5319.2 1064.8 106480 319440 532400 1064800
Category E 70080 3504 58365 2918.25 585.75 58575 175725 292875 585750
Category F 56640 2832 47140 2357 475 47500 142500 237500 475000
Category G 46200 2310 38442 1922.1 387.9 38790 116370 193950 387900
Category H 23280 1164 19361 968.05 195.95 19595 58785 97975 195950

The stamp duty charges in Delhi are as follows:
Male - 6%, Female - 4%, Joint - 5%, Senior Citizen - 6%, Company - 6%

The idea behind increasing the circle rates in Delhi is to curb black money component which is rampant in property transactions across the country. Really, will increasing the circle rates curb black money transactions? We are doubtful; on the contrary, it may further push up the property prices and slow down the already subdued demand.



In our opinion, it is a lazy way of looking at the issue of black money in property transactions. So, what could the government do to curb black money component in property transactions?


  • Equalize circle rates and prevailing market rates, i.e. there is no circle rate, in fact, stamp duty and registration charges should be calculated on the prevailing market rates. But this will increase the stamp duty burden on buyers. And hence, property transactions will slow down considerably and therefore loss of revenue for the government and adverse impact on the economy. To overcome this issue, government must reduce the stamp duty charges.

  • Reduce stamp duty charges to 1% of property value.

  • Reducing stamp duty charges and equalizing circle rates with market rates will encourage the buyer and seller to report the correct property value. And hence, it will help in curbing the black money transactions.

  • At the same time, people will transact more frequently which will have a positive impact on revenue generation for the government.

  • Therefore, need of the hour is to reduce stamp duty charges and equalize market rates with circle rates. Increasing circle rates at the current stamp duty levels will in fact encourage more cash transactions.


Is the revenue generation department of local government listening??





Have any Questions?

10 comments:

  1. Really good post, but there are a number of things which make it hard to distinguish between bots and real people. If someone is looking for low - risk and secured investment which offers good potential in the long run, then property investment would be the right choice. Investment in real estate tends to be less volatile than other investment avenues supertech eco village 4

    ReplyDelete
  2. Thank you for sharing this information and Very good looking blog.
    I am bookmark this blog need some more post

    Flats on sale in Dwarka

    ReplyDelete
  3. There are many people who are seeking to invest money in properties. But since it is about hard earned money people must think twice before investment. Thank you NirrtiGo for sharing the information. I found it very informative and useful.

    Regards,
    Apoorva

    ReplyDelete
  4. This comment has been removed by the author.

    ReplyDelete
  5. This comment has been removed by the author.

    ReplyDelete
  6. This comment has been removed by the author.

    ReplyDelete
  7. This comment has been removed by the author.

    ReplyDelete
  8. It's really very well information about Will increasing property circle rates in Delhi stop black money transactions? We believe. Thanks for given this information here about this blog.
    Makshi Infotech Pvt Ltd

    ReplyDelete