Circle rates have been slashed by 15% in Gurgaon effective Tuesday, a move that is expected to provide much-needed boost to the sluggish real estate market.
This is the first time that circle rates have been slashed in the corporate hub. In the previous two financial years, circle rates were left unchanged but it failed to lift buyer sentiment. TOI was the first to report that the district administration had mooted the proposal to cut rates and had sent it to the state government for approval.
A committee headed by deputy commissioner T L Satyaprakash proposed the cut to bring circle rates in line with prevailing market rates. Higher circle rates were hurting the market badly because all taxes have to be paid on the basis of circle rates. So, even if someone sells his flat at a rate lower than the circle rate, he will have to pay capital gains tax at the prevailing circle rate. The same applies to buyers who have to fork out more for stamp duty even when the actual sale price is lower than the circle rate. As a result, many chose not to buy or sell. Monday’s Haryana government notification is aimed to pull the market out of this inertia.
Satyaprakash said market rates had gone down over a period but the collector rates were still high in most areas, thus causing a dip in the number of registries. The new rate list is now available on the official Gurgaon administration website, he added.
Post the cut, circle rates for some prime residential areas like DLF Phase 1 and Sushant Lok will come down from Rs 77,000 per sq yard to Rs 65,450. Similarly, for DLF Phases 2, 4 and 5, it will drop from Rs 72,000 a sq yard to Rs 61,200.
The rate, however, will be different for land which has seen change of land use (CLU). For a residential plotted colony, three times the agriculture collector rate will apply. For residential group housing, it will be four times the agriculture collector rate, and, for commercial, five times the agriculture collector rate. Similarly, land less than 1,000 square yards will be treated as residential for stamp duty collection and areas less than 25 square yards – 225 sq ft or just big enough for a shop — will be treated as commercial.
Developers are confident investor sentiment will significantly improve with the rate cut. “This will reduce the overall cost as these rates are the basis for tax calculations,” said Navin Raheja of Raheja Developers and added that this is a good move as property prices have dropped over the past couple of years, creating a gap between the transaction value and circle rates.
A buyer from Wazirabad area said, “We are forced to pay additional stamp duty and capital gains tax on the differential value as well. This results in an extra payout. The move will benefit buyers.”
Source: ET Realty
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