New Delhi: In a bid to bridge the gap between property circle rates and market prices, the Delhi government is mulling over a substantial revision of circle rates, proposing an increase of up to 35 per cent.
This move comes after a protracted period of deliberation, objections, and suggestions from various departments, especially the finance department.
A senior official from the revenue department emphasized the need for this revision, stating, “Since there is a significant gap between the existing circle rates and the actual market rates for property transactions, we are proposing a potential increase of up to 35 per cent. However, we are also committed to considering feedback from stakeholders and potentially reclassifying certain colonies based on factors like location, amenities, and current market rates.”
Circle rates serve as the minimum benchmark for property valuation in the national capital and were last updated for residential areas in 2014.
However, the recent increase in circle rates for agricultural land, from a modest 53 lakh per acre set in 2008 to a range of Rs 2 crore to Rs 5 crore, depending on location, highlights the urgency of addressing residential and commercial rates.
The government has been actively pursuing this issue, forming an empowered committee in 2016 and establishing four working groups in 2021 to recommend revisions.
Despite these efforts, a final decision has remained elusive. Former Deputy CM Manish Sisodia had stressed the necessity of aligning circle rates with market rates to bolster government revenue, particularly outside of GST. Officials have pointed out shortcomings in the earlier proposal.
One official noted, “The proposal lacked proper reasoning for the creation of sub-categories, and it recommended calculating property values based on current costs instead of considering the year of construction and depreciation.”
This has led to a re-evaluation of whether sub-categorisation is indeed needed, given the potential complexity it could introduce to the rate structure. Delhi’s current circle rates are based on a 2004 report by the Dharmarajan Committee, which divided the city into eight categories. The proposed sub-categorization aimed to address this issue by expanding the categories from eight to 24.
Recently, the Aam Aadmi Party (AAP)-led government also approved district-wise increases in circle rates for agricultural land and areas adjacent to the Yamuna barrage, further highlighting the government’s commitment to addressing property valuation concerns. However, the real estate landscape remains to be seen pending approval from key authorities.