At a time when several starts have reduced stamp duty and circle rates to offer better housing affordability, the Gurgaon administration has proposed a hike in collector rates for the year 2021-2022, the minimum value below a property can’t be registered in government records.

The decision to increase the collector rates, also known as circle rates, will primarily push up values of independent premium properties in some upscale HUDA sectors and licenced colonies.

The administration has increased the collector rate for properties in HUDA and licensed colonies by 20%, from Rs 5,500 to Rs 6,500 per square foot. In the HUDA sectors, the collector rates for group co-operative housing societies have been increased from Rs 3,600 sqft to Rs 7,500 sqft. However, no change has been administered by the authorities on collector rates of plots in licenced colonies and HUDA sectors.

The new rates would come into effect from April 8, 2021, on all tehsils of Gurugram.

Only recently, the Haryana government introduced a transfer charge on property transactions in the secondary market, inviting criticism from the developer community.

The Gurgaon administration has now decided to increase collector rates of certain properties amid land owners, builders and homebuyers demanding the district administration to reduce the rates by at least 10% to provide an impetus to real estate, a sector that has been dealing under the intense pressure caused on demand because of the coronavirus-hit economy.

The developer community has shown its displeasure over the move.

“Instead of increasing the circle rates, the administration should have stayed only with its decision of November 2020 of imposing additional tax liability where the differential between market price and circle rate is up to 20%. The current decision will dent the real estate market, which is in the revival mode after the COVID situation,” said Sanjeev Arora, Director, 360 Realtors.

“In all our dealings with the buyers, we have concluded that they are looking for respite. Right now, the developer community is using all means to help the buyer realise their dream of owning a real estate asset, but the community needs support from the government. The rates in Gurugram are already high, and we hope that the administration realises it,” he adds.

Achal Raina, COO, Raheja Developers, is of the opinion that the district administration should have taken a cue from the support measures other states are offering currently to the sector.

“We have to look at states that are trying to help the buyers save money in these challenging times. We have examples where states have reduced stamp duty, and Gurugram has gone ahead with an increase in circle rates. We request the administration to deliberate on the ways to help the real estate sector in the city. The demand in the city is high, and we have been witnessing a good number of sales; this will automatically mean good revenue. However, increased circle rates will force the buyers to go into the shell, which will affect the revival,” says Raina.

Collector rates in Gurgaon: 2021

Which areas have seen the sharpest hikes?

Collector rates in Aralias, Magnolias and Camellias have been hiked from the previous Rs 20,000 sqft to Rs 25,000 sqft. At Carlton and Crest, another two upscale developments, collector rates have been increased to 15,000 and Rs 12,000 per sqft as against their previous rate of Rs 8,000 sqft.

At licenced group housing colonies in sectors 15, 27, 28, 30, 31, 31A, 39, 40, 41, 42, 43, 45, 46, 50, 51, 52, 53, 54, 55, 56 and 57, the collector rate has been hiked from Rs 5,000 psf to Rs 7,000 psf.

From Rs 8,000 psf to Rs 9,000 psf, rates have also been hiked for Belaire, Central Park, Palm Springs, Park Palace, Exotica, Laburnum, Unitech World Spa, The Verandas, Parsvnath Exotica, Princeton and Vipul Belmonte projects. These are mostly located along the Sohna Road and the Gold Course Road.

No change has been implemented in rates of commercial and industrial properties.

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All about circle rates in Gurgaon

Among the various expenses associated with property purchase are the stamp duty and registration charge that buyers have to pay, to get immovable assets transferred in their names in the government’s records. To calculate stamp duty, states determine the circle rates of properties, which vary from city to city and from area to area. In this article we discuss the Gurgaon circle rates. Note here that the circle rate, also known as the ready reckoner rate or collector rate, is a benchmark below which a property cannot be registered in India.

Also, the stamp duty is a certain percentage of the property value that the buyer has to pay to the district revenue department, at the time of registration. These charges vary from state to state and city to city and broadly range between 3% and 8% across the country. For women buyers, charges are mostly lower than the duty charged from men. In Delhi, for example, women buyers pay 4% as stamp duty, even though the charges for male buyers is 6% of the transaction value.

See also: Stamp duty rates in 20 cities

Circle rate in Gurgaon in 2020

Amid a multi-year slowdown in the housing market in the Millennium City, the Gurugram district administration has decided to keep the circle rates unchanged for the latter half of fiscal 2021. This means that there will be no hike in the minimum property valuation, from October 2020 to March 2021.  According to Gurgaon revenue officer Basti Ram, the administration has deiced to maintain status quo on circle rates, because ‘there has been no increase in their market rates’.

Data available with Housing.com show that the national capital region is second only to the Mumbai Metropolitan Region, in terms of unsold housing stock  right now. As on June 30, 2020, builders in the NCR were sitting on an unsold stock consisting of 1,11,121 units.

In February 2020, owing to the slowdown in demand, the Gurgaon district administration rolled-back a proposed hike in circle rates, with the exception of some localities in the outskirts. The decision by the authority came, after developers in the city protested the move, citing a prolonged slowdown in demand. Areas where the circle rate was increased included sectors 15, 31 and 32A and agricultural land in four villages of Nathupur, Sikander Ghosi, Chakkarpur and Silokhera.

“The decision to not increase circle rates was taken, keeping in view the submissions made to the revenue department and the sentiments expressed by stakeholders. Most said that the realty sector, especially the residential segment, was in a limbo and the hike in rates would deter home buyers from buying property in developing markets,” deputy commissioner Amit Khatri said, after announcing the rollback of the proposed hike.

Circle rate in key sectors of Gurgaon

Click here to get the full list of circle rates in Gurugram, for 2020.

Housing.com data show that housing sales declined the most in the Millennium City during the January-March period of 2020, amid a demand slowdown. Because of this, the district administration is seen holding the old circle rates, to boost demand. There have also been protests from buyers and the realty community that circle rates in some areas had gone much higher than the prevalent market rates. This may have to do with the fact that circle rates in Gurugram were revised three times in 2018 – typically, the district administration revises the rates twice in a year. The increase made property in some markets twice as expensive. This was a key reason why this market remained one of the worst-affected ones during a nation-wide slowdown, that’s still far from over.

Here is a look at the government-fixed circle rates in Gurugram in 2020.

See also: Price trends in Gurgaon

Circle rate in HUDA Sector

Circle rate for plots in licensed colonies

Circle rate in multi-storey group housing by builder’s floor

Difference between circle rate and market rate

The rate at which a property is actually sold or expected to be sole in the market, is known as its market rate. In most cases, market prices of properties, especially in Gurugram, are much higher than the government-fixed rate. There are no limitations on registration of properties at a higher rate than the circle rate, while there are restrictions on registering the property at rates lower than the collector rate, even if you have been able to get the property for lower prices. The rule is that stamp duty and registration charges should be paid on the higher of the two values.

In case a buyer registers the property on a higher value, he would also have to pay higher stamp duty. In case the circle rate is higher than the market rate, you can appeal to the sub-registrar, to charge stamp duty and registration charges at market value. However, whether or not he decides to offer you a waiver, would be entirely his discretion.

Check out properties for sale in Gurgaon

Stamp duty and registration charge in Gurgaon

Based on the circle rate, authorities charge a stamp duty on property transactions. In Gurugram, the stamp duty rate for men and women are different. Rates also vary between areas that fall under the municipal limits and areas that are not under its purview.

Unlike most states, buyers do not have to pay a flat 1% of the deal value as the registration charge for property registration in Gurgaon. The applicable rates vary, depending on the deal value.

How to calculate stamp duty based on circle rate?

To arrive at the stamp duty to be paid for a property purchase, first calculate the carpet area of the flat/ apartment. In case of a plot, the entire size of the plot would act as the benchmark. You would now calculate the stamp duty value, by following the method below:

Stamp duty calculation example

Note that builders typically sell properties in terms of sq ft. Suppose that you have bought a house with a carpet area of 1,500 sq ft. This is equal to about 166 sq yards. Now, suppose you have brought the property in Sector 30 of Gurugram, an area where the circle rate currently is Rs 5,000. After multiplying the area with the per sq yard circle rate, you arrive at the stamp duty you will have to pay.

166 x 5,000 = Rs 8.30 lakhs

Considering the deal value of over Rs 25 lakhs, you will have to pay another Rs 15,000 as the registration charge.

See also: Your guide to paying property tax in Gurugram

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