Circle rate relief to boost realty sales

With real estate prices dropping in many cities, property is sometimes sold at prices lower than the government-fixed circle rates. To address the taxation problems that arise from this gap, the Budget has proposed tax relief for buyers and sellers by allowing property to be valued at up to 5% below circle rates for calculation of stamp duty and capital gains tax. Circle rates, also known as ready reckoner or guideline value, have been revised upwards by most local governments over the last 15 years. Circle rates were introduced to prevent tax evasion by declaring a lower sale price of the property on paper. Stamp duty is collected either on the sale proceeds or the circle rate value, whichever is higher. But now that real estate prices are sliding in many cities such as Delhi-NCR, Bhopal, Kolkata, Lucknow and Jaipur, circle rates are higher than prevailing market rates.