A+| A| A-
Setting Circle Rates for Urban Property Transactions
Circle rates are becoming the norm in most states so as to curb under-reporting of prices and also reduce the extent of unrecorded transactions in realty markets. However, to ensure that circle rates are updated and maintained in a fair manner government authorities must follow a scientific method to determine rates without causing arbitrary changes in the market.
Property markets in India are opaque. Actual transaction prices are rarely known; transactors under-report property registration values to save on stamp duty. To reduce this under-reporting and to increase stamp revenues, most state governments publish estimates of market values known commonly as circle rates; guidance values; guidance rates or ready-reckoner rates. These circle rates, which vary according to locality and mirror market prices, establish the minimum rate at which stamp duty is calculated for property registration. Circle rates are also periodically revised to reflect market prices, and in recent times, these revisions have been frequently contested.
The public interest litigation filed in 2014 against the revision of circle rates in Delhi has once again brought to the fore the resentment towards “unreasonable” and “arbitrary” methods of determining circle rates (Indian Express 2014). The divergence in views between the government and the citizens is not new — circle rate revisions in nearly every city have been met with criticism from the residents who protest not only on the revised value (Times of India 2010) but also the methodology of revision.
Dear Reader,
Or
To gain instant access to this article (download).
(Readers in India)
(Readers outside India)
