Real estate sales to be boosted by relief on circle rates

1 min read

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Real estate prices have come down in several major Indian cities. This is why the sector has been witnessing a spurt of revival in recent times. Properties are sometimes sold by developers at lower prices in comparison to the circle rates that have been fixed by the Government. For tackling taxation related problems, the Union Budget 2018 has also proposed taxation relief for both sellers and buyers by enabling property valuation of 5% which is lower than the circle rates for the calculation of capital gains tax and stamp duty.

The circle rates are also referred to as the guideline value or ready reckoner and have been upwardly revised by local Governments over the last 15 years or so. Circle rates came into effect in order to reduce chances of evading taxes through the declaration of a lower selling price for a property officially. Stamp duty is also collected based on the circle rate value or on the sales proceeds, whichever remains higher.

Prices of property are coming down in several major cities like Bhopal, Delhi-NCR, Jaipur, Lucknow and Kolkata. This is where circle rates stand higher than the current market rates. As a result, people may look to sell off their property at a rate which is lower than the circle rate. However, the registrar office will still be charging stamp duty based on the circle rate. Once this sale is over, the income tax department will be assessing the difference between the sales value and circle rate as the money which is unaccounted and both the seller and buyer are taxed accordingly.

Union Finance Minister Arun Jaitley has also proposed that there will be no adjustments in cases where the circle rate value does not surpass 5% of the total consideration. This will help in lowering genuine and transactional hardships. According to experts, this proposal will be going a long way towards lowering overall issues for property sellers. The Government has given recognition to price variations within a particular locality or zone with the same circle rates.

 

Resident Editor