Registering your properties is all set to get costlier after the Delhi government's decision to hike circle rates by up to 250%. But experts claim that revision of these rates won't have a huge impact on real estate prices in the Capital.
The decision was taken in a cabinet meeting presided over by Delhi chief minister Sheila Dikshit on Monday.
Circle rates are charged on the basis of categories prescribed by MCD for calculation of property tax under unit area method. Under the system, the city has been divided into eight categories - A to H, wherein A stands for posh colonies.
"The growth of the real estate market and instances of under valuation of properties necessitated this decision. Delhi government is keen to make property rates more close to market rates to eliminate the role of black money. This will increase revenue and bring transparency in property deals," said Dikshit.
The rates in category A has been increased by 250%, for B, C and D categories by 100%, for E category by 25%, for F category by 20%, and for G and H categories by 15%. Category A includes areas like Vasant Kunj and New Friends Colony. Its circle rate has been increased from the existing R86,000 per square metre to R2,15,000.
Meanwhile experts have welcomed this move. "This upward revision will help bring some level of rationalisation in the market. It will minimise the difference between the prevailing 'market rate' and the existing 'circle rate'. But the rise in rates by 250% may adversely affect consumer sentiment as property registration will become costlier," said Sachin Sandhir, managing director, RICS South Asia, a real estate consultancy.
Delhi government officials said the hiked circle rates are still less than the prevailing market rates in Delhi and those in NCR towns of Gurgaon and Noida. The new rates will come into force only after the issue of a notification of this effect.
In June 2010, Delhi government had increased circle rates by up to 300%. But the Lt. Governor had asked the government to review it. Finally in February 2011, the circle rates were increased by 100% across the city.