NEW DELHI: Delhi is gearing up for a major overhaul of the circular rate for the first time in more than a decade, with the government considering major structural changes aimed at bringing property valuations in line with real market prices. Among the key proposals currently under discussion are the introduction of a new A+ category for the ultra-premium Lutyens’ Delhi, a complete overhaul of farm valuations, location-based pricing and a rating system to keep rates in sync with market fluctuations.
A senior official said the A+ slab was proposed by stakeholders as several localities in Delhi’s Lutyens, where property prices often far exceed even the highest reported rates, are currently in category A, which does not reflect their much higher market value. “The gap between reported rates and transaction values in these areas is one of the largest in the city,” an official said.
Another major part of the upcoming overhaul are farmhouses, especially in the urbanized areas of south Delhi, where properties are routinely sold at extremely high prices, host commercial-scale events such as weddings and function as luxury residences. “Many farms are still valued at agricultural rates despite being part of urbanized Delhi. Their circle rates hardly vary from those in the outskirts of Delhi, creating a huge mismatch,” a senior official said. New proposals could suggest farm rates would be location-based and benchmarked against prevailing property values, replacing the outdated agricultural valuation system, he said.
Experts have long argued that this mismatch results in a significant loss of revenue for the government.
In the case of Delhi, the difference is greater as the circle rates for residential/commercial properties were last revised in 2014, and for agricultural land in 2008.
Circle rates in many luxury colonies are significantly lower than market prices, resulting in large cash components in deals, artificially low real estate valuations on paper and lower stamp duty collections. In contrast, a few places have circle rates that are actually higher than their current market values, and these are expected to be rationalized downward.
Currently, Delhi is divided into eight categories (AH), with rates ranging from Rs 7.74 lakh per square meter in category A to Rs 23,280 per square meter in category H.
However, officials said development levels vary widely within the same category. For example, Golf Links and Kalindi Colony fall into category A, despite major differences in real estate prices, social amenities and infrastructure.
The exercise is being conducted by a committee headed by the divisional commissioner, which was constituted by Chief Minister Rekha Gupta in June. Officials said the proposal could include both upward and downward revisions and will take into account public feedback before submitting it to the CM, who manages the revenue portfolio.
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