Delhi government may bring rent deeds under circle rate

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Delhi government may bring rent deeds under circle rate
In a major initiative, the Delhi Government has proposed that rent and lease deeds will be based on the circle rates of properties, a move aimed at mopping up more revenue and curbing tax evasion.

As per the proposal moved by the Revenue department, stamp duties on lease deeds and rent agreements will be calculated as per existing circle rates of an area and no under valuation of properties will be allowed.

Divisional Commissioner Mr Dharampal said circle rate may be applicable on properties whose tenure of rent agreement is more than one year.

"Often the real rent amount is not shown to save on stamp duties. We are planning to impose taxes on rented properties based on circle rate of a particular area," he said.

Sources said 2 to 5 per cent circle rate may be imposed on rented properties which may raise the rents of commercial properties in areas like Khan Market, Connaught Place and Greater Kailash.

According to the proposal, the stamp duty on rent agreement will be linked to the market value of properties and officials said implementation of the proposal will enhance the government's tax collection.

Circle rate is the minimum valuation at which properties have to be registered with the government. The circle rates were first introduced in Delhi in 2007, dividing the city into eight categories.

"The move will stop evasion of stamp duty as people often do not disclose the actual rent amount in the agreement," Mr Dharampal explained. The proposal has been sent to the finance department for approval. it will then be sent to the Lieutenant Governor for clearance.

The last circle rate revision was done in 2012 when the minimum rates for valuation of land and immovable properties were increased substantially.

The government is also in the process of revising the circle rates. Circle rate on rented properties has already been implemented in the neighbouring city of Noida, where it is between 10 to 15 per cent.


Read more about: rent, real estate
Story first published: Thursday, May 15, 2014, 9:28 [IST]
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