Dedicated locality research platform
Dedicated locality research platform
Enter your email address and you will receive
a link to reset your password
The Delhi Government is currently in the process of developing a fresh proposal to raise Circle rates for both residential and commercial properties by 35%. The city's earlier endeavour to establish eight sub-categories labelled as "A-H" in residential areas, involving a multi-tiered structure of circle rates, has been abandoned and sent back for re-evaluation due to its perceived complexity. The motivation behind this rate increase stems from the necessity to narrow the gap between prevailing market values and the existing government rates.
An official source highlighted that the reason for this surge is the notable escalation in property market values over the past nine years. As a result, there exists a disparity that needs to be addressed through the revision of circle rates. This measure is not only expected to bring better alignment between market and government rates but also to bolster government revenue collection. The last revision of circle rates in Delhi occurred back in 2014.
Circle rate, or minimum rate of valuation, is the standard value of an immovable property assessed and regulated by the respective State government in which the property is located. Here, the word immovable property refers to residential property, commercial property and land/plot. Circle rates differ from Market rates wherein circle rates act as the property's base value for all sale or purchase transactions and market rates, on the other hand, are the actual price of sale and purchase price of the property. Properties cannot be sold for amounts below the circle rates as they essentially serve as reference points for calculating stamp duty and registration charges.
Likewise, in Gujarat, where circle rates are referred to as Jantri Rates, a substantial revision has taken place in April 2023. After a span of 12 years, these rates have been doubled in the latest update. The government of Gujarat justified this decision by stating that it was made "in the broader interest of the state's real estate sector and the general public." This significant augmentation of Jantri rates is attributed to the upsurge in economic activity, rapid industrialization, and both urban and rural development that the state has been experiencing.
Contrastingly, in Maharashtra, the circle rates, referred to as the ready reckoner rate, remain unchanged. This decision has been upheld to sustain momentum within the real estate sector, which is currently grappling with a downturn attributed to the escalation in home loan rates. The most recent adjustment occurred in 2022, with an average increase of 8.80% across various municipalities within the state. In Maharashtra, a premium of up to 20% is applied to the ready reckoner rates. However, this premium is exclusively applicable to high-floor buildings within specific regions, namely Mumbai, Nashik, Navi Mumbai, and Pune.
In Karnataka, the circle rate is primarily known as the Guidance Value. The state's Guidance Values were last adjusted by 25% in the fiscal year 2018-2019. Following that, these values remained untouched due to the impact of the COVID-19 pandemic. Subsequently, after the formation of the new state government cabinet, there was a 14% increase in the guidance values. Despite this increment, the real estate market in Bengaluru, which holds the highest Guidance Value in the state, has demonstrated resilience and remains on a steady growth trajectory.
In conclusion, the ongoing developments in circle rates across various states in India reflect the dynamic nature of the real estate sector and its interplay with economic factors, government policies, and market conditions. The Delhi Government's efforts to bridge the gap between market and government rates by proposing a 35% increase in circle rates underscores the need for alignment and fairness in property transactions. Gujarat's significant revision of Jantri Rates highlights the state's commitment to fostering growth and development. Meanwhile, Maharashtra's decision to maintain stable ready reckoner rates aims to provide stability to the real estate market amid challenging economic circumstances. Karnataka's adjustment of Guidance Values reflects the state's adaptability to changing times while ensuring continued growth in its real estate sector. As these states navigate their unique real estate landscapes, the balance between market dynamics and government regulations remains a key consideration in shaping the future of property transactions.
Propscience is India’s dedicated property news portal. We cover the latest events, news, trends, deals, new launches and more.
All our services and tools are completely free of cost and available 24X7!
