Circle Rates And Market Prices Gap Narrows
The gap between the ready reckoner rates (RRR) and the actual market prices in the primary (sale by developer) real estate segment in the top cities has narrowed over the last five years. From a more than 100 percent difference between the two rates in certain areas in Mumbai, Pune and Gurgaon in 2015, some localities presently show a mere 6 percent variation, said a Anarock report. The gap between market values and RR in many areas is as low as 6-7 percent, equal or even negative, the report by Anarock has said. Contrary to other top cities, Noida saw a reduction of as much as 10 percent in circle rates in the last two years - a step taken to boost real estate demand. Circle rates on Noida Expressway have reduced from Rs 4,700 per sq. ft. in 2016 to Rs 4,366 per sq. ft. in 2020. As a result, the gap between the market values and circle rates has increased in the last four years. The difference between the two rates was 10 percent in 2016 and is now at 16 percent. In value terms, the average RRR for flats in Mumbai's Lower Parel is approximately Rs 32,609 per sq. ft. while the average market value is Rs 34,660 per sq ft. In Worli, another high-profile area in the city, the average RR rate is Rs 35,350 per sq. ft. as against the average market value of Rs 38,560 per sq. ft. "The gap between market values and RR/circle rates in many areas is as low as 6-7 percent, equal or even negative. Registering a property below circle rates is not permissible. Section 43CA of the I-T Act says that developers/sellers will attract penalties for selling lower than RR rates. Moreover, even if buyers somehow purchased property below the circle rates, they will bear an additional tax burden as the difference between two rates is taxable – both in the hands of the buyer and seller,” said Anuj Puri, chairman, ANAROCK Property Consultants. Reducing RR rates would reduce stamp duty on property purchase, thereby boosting buyer demand and also providing relief to developers as the multiple premiums they pay to the state governments are linked to the RR rates.
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