What are Property CIRCLE RATES & What do they signify in terms of sale & purchase of immovable properties?

This refers to at least a dozen of queries received from our readers pertaining to our previous post here on bricks-n-mortar.com (titled: "Delhi Government Moots Increasing Circle Rates again towards Sale & Purchase of Property in Delhi, India")

While all appreciated the piece of news that we had shared, the crux of the common question asked by some of our readers thereafter was:

WHAT ARE CIRCLE RATES & WHAT DO THEY SIGNIFY?

Explaining in simple layman terminology, CIRCLE RATE is the minimum designated valuation amount in terms of rate per unit plan area of the land, property, flat, etc. that can be termed as 'Saleable and Immovable Property'.

In other words, Circle Rates are the minimum rates per unit land or floor area that the respective Governments and/or Municipal Corporations/ Bodies fix for particular areas and localities based on various factors to list a few like--

• Categorization of colonies in terms of importance of place and its locality, plushness,services & amenities available there and nearby
  
• Demarcation through actual/pseudo boundaries and municipal limits in terms of population and/or status of people living there and nearby (reflecting the status index of living)
  
• Cost of construction coupled with kind and type of aesthetics adopted in the respective areas (reflecting the average monetary worth of people living there and nearby)
  
• Applicable 'Usage' factors (primarily reflecting whether the properties in such localities on an average are used for residential/ commercial/ social/ educational/ other purposes)
  
• Depending upon whether the localities are primarily developed privately or by government/ semi-government/ public sector units
  
• Demand/Supply ratio of land and the amenities the place offers to its inhabitants signifying the 'Market dynamics and trends' associated in terms of abundant availability and scarcity as compared to the demand for it. Higher the scarcity, higher the demand; and therefore, higher the cost associated to land per unit area (meaning higher circle rate of the area)

As such, one can easily comprehend by now that the Immovable Properties are usually registered by respective governments and local municipal bodies in terms of Circle Rates thereby defining the base rate per unit area for the respective sale & purchase of immovable properties, and in turn generating revenues for the government in terms of the preset Registration fee and Stamp duty that are calculated as a percentage of the registered price of a property.


A quick useful footnote here in the end...
The Circle Rates are the minimum rates per unit area for the respective areas below which officially no realty market deal is supposed to happen and be legalized. The actual property rates per unit area in the real world usually are higher than the benchmark circle rates, and that is how and where black money changes hands among the property sellers & buyers who tend to show lower valuations of the properties thereby trying to save the quantum of registration fee and stamp duty that one need to pay to the government.

Let all of us pledge not to use cheap tactics and gimmicks to show undervalued property transactions, whenever we enter into one, and pay the government its valid dues.
What do you say? 
YES / NO / PERHAPS YES / PERHAPS NO / CAN'T SAY

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Related posts:
-  Delhi Government Moots Increasing Circle Rates again towards Sale & Purchase of Property in Delhi, India
-  MCD Property Tax | Online submission of MCD Property Tax | FAQs about MCD Property Tax

Read more at: http://indiatoday.intoday.in/story/new-circle-rates-bode-well-for-end-consumer/1/158816.html

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