The UP state government may not increase the circle rates of those Noida sectors where apartments have been constructed, with officials saying the raise would be limited to sectors having plotted development alone
The Noida district administration has been under pressure from builders and homebuyers to withdraw the draft proposal increasing circle rates in Noida for all sectors–by 14% for plots and 6.5% for group-housing projects–that it made public last week. According to higher circle, homebuyers have to give more stamp and seller have to pay higher capital gains tax.
Indicating a climb down from its plan to go for a steep raise in circle rates across Noida, the district administration says that middleclass housing would not be affected by the proposed increase and it would be restricted only to premium areas of the city.
The circle rates refer to the minimum rate notified by the government through the registrar or sub-registrar office of Noida for registration of property transfers process.
Stamp duty is to be paid on the higher of the declared transaction value and the value calculated as per circle rate chart applicable for the area or sector of Noida. Stamp duty is payable as a percentage of the higher of declared agreement value and assessed value as per circle rate chart.
In fact, in a number of sectors, particularly in group housing segment, the present circle rate is higher than the prevailing market price. This has caused a lot of problem to buyers as well as sellers. Now, they have to pay higher stamp duty on the basis of higher circle rate than what they would have been paying if applied on the transactional value, based on the market rate. Besides this, the income tax department also raises tax demand due to difference in the value of transaction and value of the property on which the stamp duty is paid.
A senior official said that housing for the middle class and lower middle class has been kept out of the increase as the district administration does not want to create additional burden on them. The increase in the circle rate will come into force from August 1.
The authority is also planning to increase the stamp duty rate from 5% at present to 7%. However, this too has been put in abeyance, as high stamp duty leads to lower transactions.
According to Yash Miglani, director of Migsun Group, we are already facing problems due to the slowing sales velocity and consequent increase in pressure on cash flows. Such a decision that increases the cost of acquisition may result in further delay in the purchasing decision of homebuyers.
Manoj Gaur, president of Credai, NCR, and MD of Gaursons India Ltd, also told that, for a developer, a lot of other payments like purchasable FAR and other extra charges depend on the circle rates. So, if it is increased, they will have to shell out more, which would automatically result in needless spike in cost of residential units for homebuyers.
Author: Sumit Sighania
Sumit Sighania is currently serving the position of a Sr Executive – Content Developer at a3solutions.in. His responsibilities include writing and editing real estate content for the website. His main interests are photography, travelling and food.