The recent hike by Delhi government in circle rates of property in Delhi will not just adversely impact the real estate sector but also the buyers and sellers of real estate assets. The property transactions in comparatively richer areas in particular and other localities in general may come to a grinding halt, said experts adding that for sellers of property on posh streets such as Aurangzeb Road, Prithviraj Road, Amrita Shergill Marg, Mansingh Road and many other areas including Lutyens Bungalow Zone will face this problem.
The bigger hurdle will be for buyers who will have to shell out huge stamp duty at the new circle rate, despite paying a lower value for the property. Apart from this, the tax department will consider the difference between the circle rate and market value as income from other sources and tax them accordingly, Senior Partner, Seth Dua & Associates.Sunil Seth said, adding that the prevailing slump in realty market has pushed many to sell their properties at distressed rates, but the change in the circle rates will impact such transactions as well.
After the latest hike, the new circle rates in the LBZ have become much higher than market value of the properties, especially for plots larger than one acre. Property values in the LBZ area hover in the range of Rs 4.5 to Rs 5.5 lakh per sq yard. The new circle rate for the area, which falls under category A, is Rs 6.5 lakh per sq yard, or Rs7.74 lakh per sq metre and as per new rate, a one-acre plot in the LBZ will cost around Rs 315cr.
That apart, similar problem is being faced by property owners in some other category areas such as Friends Colony and Maharani Bagh. The anomaly will create a huge issue for both sellers and buyers involved in property transactions in this area, Director, Daulat Singh Consulting, Jaiwant Daulat Singh said. The national director - residential, at real-estate consultancy Knight Frank India, Mudassir Zaidi, said the hike will increase the total cost of transactions and will prove to be a double whammy affairs to the already depressed property market.