Skip to main content

Stamp Duty: Know what circle rates mean

Let us first understand the correlation between stamp duty and circle rate. Stamp duty is the levy paid by a buyer on the total cost of the property. It is paid at the time of registration of the property (after the transaction is complete). Circle Rate is best defined as the minimum selling price, or minimum value of the property, at the exact time of being sold or being bought over.

To put it simply, the stamp duty has to be paid on the legal value of your property transaction. So, do we have to pay the stamp duty on the circle rate? Well, the answer is no. But then why are we focusing on stamp duty and circle rates through this article.
Stamp duty and circle rates, both are very important for the buyers to understand, and know before they actually sign a legal agreement.

Usually, it is the market value of the property on which the actual transaction takes place. Circle rate is the minimum value of the property, as fixed by the state government, who is the recipient of the stamp duty (amount) as revenue for the property exchange (between the seller and the buyer).

Circle rate is nothing but the government-perceived value of the property. A buyer can consider it as the guidance value for the property. It also determines the purpose of associated charges like stamp duty to be paid.
Many a times, the market value is higher than the circle rate. The circle rate is the floor price, and therefore, the actual cost of selling/buying the property can be much higher. If the seller of a property perceives the value of the property to be higher than the fixed rate, the sale price is bound to be higher than the circle rate.  

So, does that mean you are required to pay higher stamp duty as per the market value?
The common practice of registering the actual property transaction value pays a pivotal role here. Usually, the real estate transactions are registered at the circle rates only. This means the actual transaction value on paper is as per circle rates only.

On the hindsight, the market value is much more the registered value of the property. This gives rise to cash (black money) transaction regarding a property transfer between the two parties.

The buyers have the benefit of paying low tax (stamp duty), and the seller obviously gains by profiting from the market value. It is the government (in form of tax collector), who has to bear the loss in revenue. If the government decides to increase the circle rate, then it is the buyers who will have to shell out more, as sellers will continue to benchmark the property price higher than the circle rate.

It is now very evident, that it is really the market rate which is a strong indicator, for property purchase. Of course, the whole demand and supply factor in a particular area, also determines the value of a property.

Still, it is important for the buyers to be aware about the circle rate, as it serves as a precursor to determine the final price. You and I should not be paying if there is a huge price gap between the government value and seller value of the land.

If we talk about the present scenario or post demonetization phase, the government has increased scrutiny of black money transaction in the real estate domain. We, as responsible citizens of India, should register the correct value of the property, and pay our tax dutifully.  




Labels:

Comments

Post a Comment

Popular posts from this blog

IT Department attaches benami properties worth Rs 43 billion; Jaipur and Mumbai top the list

New Delhi: The Income Tax Department has attached over 1,500 ‘benami’ properties worth Rs 43 billion in the last one and half years, around the same time as the introduction of the revised benami legislation, a financial daily has reported. According to a report in the Business Standard, Jaipur and Mumbai top the list, each with an attachment of 200 properties. This is followed by Lucknow with an attachment of 50 properties, Kolkata at 144, Chandigarh at 110 and Hyderabad at 100 properties. Patna has seen the least number of property attachments at 30, the report added. know more about  INTERNATIONAL LAND DEVELOPERS FRAUD  by clicking on it. “The I-T department has worked swiftly in identifying benami transactions since the enactment of the revised legislation. Over 1,500 properties have been attached so far. Many are on the radar. Search and surveys are on involving gold dealers, bankers, hawala operators, senior government officials, and politicians, etc,” Business Sta...
10 comments
Read more

Greater Noida West: The Hub of Affordable Realty

Greater Noida West is one such area under National Capital region which is buzzing with realty activities with almost 65 developers’ presence that have come up with a slew of projects here with multiple options. The location is destined to attract most of the middle income group customers as most of the projects being developed here are in the affordable range. In comparison with other parts of the Delhi NCR like Noida Expressway, Dwarka, Gurgaon Expressway, and NH-8, Greater Noida West, erstwhile Noida Extension is the only region which has become one of the favorite residential zones for middle-class buyers as the place offers properties in the affordable range . The area, once surrounded by controversies has moved ahead and is witnessing a set of planned infrastructural development. The area has the lowest property prices in the entire Noida region and is fast becoming a residential hub. Those who had invested in the region three years ago are already sitting on an appreciated pro...
Post a Comment
Read more

Professionalism and Transparency can make a Brand Excel

“The keys to brand success are self-definition, transparency, authenticity, and accountability”, these lines by Simon Mainwaring express the importance of transparency exquisitely. Transparency helps in building the trust of the customer in any business. Especially, when it comes to real estate, it becomes necessary for the developer to maintain professionalism and pellucidity as it is the matter of people’s dreams and aspirations. Get affordable housing ranges at  HomeKraftBy ATS  by clicking on it.  In the real estate sector, the accomplishment of the commitments works as the benchmark for the future projects. Both, established and the upcoming developer would never overlook the transparency factor. The primary aspect the buyer focuses on, apart from budget, amenities, and location, is the transparency and history of the developer that helps him in the decision-making process. Post RERA implementation, India has made improvements and hence shifted one spot up in the...
Post a Comment
Read more