Understanding Circle Rates

We often come across terms such

as Circle Rates or guidance values.
But ever wondered what circle rates
actually are? And how these rates
afect property prices?
Circle rate is the minimum rate for
property or assets (plots,
independent houses, ats! in a
particular area"locality. A realtor
understands circle rates as the
minimum value at which the property can #e registered.
But to understand circle rates, we should o#serve the connection #etween
circle rates and mar$et rates. While a mar$et rate is the practical transaction
value determined #y the mar$et forces driven #y the demand and supply,
circle rates are %nalised autonomously #y the revenue ministry considering
the availa#le infrastructure and other parameters.
Who sets the circle rates? Well, circle rates are set #y the state government&s
revenue department or local development authorities. 't also determines
the stamp duty charges and the registration charges to #e incurred in
property transactions.
Impact on Property Prices
'n a property transaction, the #uyer #ears the #urden of additional charges
that includes stamp duty charges andregistration charges. (hus, increasing
circle rates indirectly control the property prices as more stamp duty )
registration charges are to #e paid #y the #uyers.
*sually the circle rates are far lower than the present mar$et values and thus
e+perience a hi$e when are intended to update #y the state government.
(hus, circle rate revision #lindly gives positive inclination for property prices
though reduces the transaction volumes slightly.
(hough the concept of circle rates or guidance values #ene%ts include #uyer
security or mar$et rationality, that however could #e achieved only when
these values are up to date con%rming with the latest mar$et values in
respective localities. (hat e+plains the circle rates are set far from practical
rates defying the reality due to irregular revision #y the state governments.
,#solete circle rates cannot ensure proper paperwor$ with actual transaction
value leaving a loophole in the concept, which is often e+ploited #y the
realtors resulting in signi%cant %scal loss to the e+che-uer of the
government.
.rior to the year /012, circle rates were updated every couple of years, while
post /012, they are reviewed on a yearly #asis as per the new government
norms.
3oo$ing at circle rates in 4elhi, 5unicipal Corporation of 4elhi (5C4! has
categorised eight (A67! categories of colonies in 4elhi. Based on property
ta+ation 8ones, diferent circle rates are assigned to each category as in
ta#le #elow. 3ast revision of circle rates were in the year /01/, which came
into efect from 4ec 09, /01/.
Category A Colonies 6 Rs. :,;9,000 per <-uare 5eter
Category B Colonies 6 Rs. /,0;,:00 per <-uare 5eter
Category C Colonies 6 Rs. 1,21,0;0 per <-uare 5eter
Category 4 Colonies 6 Rs. 1,0:,2=; per <-uare 5eter
Category > Colonies 6 Rs. 9=,21: per <-uare 5eter
Category ? Colonies 6 Rs. ;@,1;1 per <-uare 5eter
Category A Colonies 6 Rs. 2@,=/0 per <-uare 5eter
Category 7 Colonies 6 Rs. 1B,2:1 per <-uare 5eter
With the increasing gap #etween mar$et rate and circle rate, it is actually
increasing #lac$ money transactions in the real estate mar$et. (hus,
ensuring the regular adaptation of the circle rates with the mar$et values is
imperative. ,nce in place, it will have positive inferences li$e eCcient
treasury collection for the state or local governments, which could further #e
used for infrastructure development.
SourceD Common?loor.com
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