For property buyers in Delhi, it is important to know that stamp duty and property registration charges are revised periodically, while the amount contribute as the state government’s largest revenue sources. Stamp duty and property registration fees depend on the registered price of property and the ready reckoner rate or circle rate.
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Ready reckoner rate: Meaning and significance
The Ready Reckoner (RR) rate, as it is referred to in Mumbai, is also known as the Circle Rate in Delhi. The ready reckoner rate Mumbai is the government’s estimate of minimum property values in various locations. The rate differs in every state, city and in different localities in those cities. Authorities determine the price of real estate in a particular locality, based on several factors. Based on these factors, a benchmark is set, below which no property transaction can take place in that particular locality. This benchmark is known as the Ready Reckoner/Circle rate. It is the minimum price on which the government will charge stamp duty and registration fees.
Example: So, how to calculate the ready reckoner rate? Suppose that you purchased a residential property at a market price of Rs 6,500 per sq ft. If the ready reckoner rate for the locality is Rs 5,500 per sq ft, then, you will have to pay the stamp duty and registration charges on the higher value, i.e., the market value. In any case, property registration in that locality cannot take place below the minimum value defined by the ready reckoner rate.
The Ready Reckoner rates are typically lower than the current market rates of properties in a particular area. The Ready Reckoner rate is reviewed periodically and revised, to bring it closer to market rates. As real estate transactions take place in the private realm and the price is often not disclosed, state governments need a benchmark, to ensure that they do not lose out on an important source of revenue.
See also: What is Stamp Duty Rates & Charges on Property?
What is Ready Reckoner rate?
The minimum value at which a property has to be registered in the case of its transfer, is called the Ready Reckoner rate, which is also known as circle rate. To avoid evasion of stamp duty through the undervaluation on agreements and to minimise the disputes on the quantum of stamp duty, all state governments publish area-wise ready reckoner rates of properties, on a yearly basis. For eg. Maharashtra publishes a ready reckoner rate Mumbai.
How to calculate ready reckoner rate?
Calculate the built-up area of the property (know what type it is- flat, commercial unit) etc. and take into consideration factors like floors, amenities, construction age, area etc. If there are two values of built up area mentioned – the original one and the one with 1.2 times the carpet area, take into consideration the value that is more. Now select the location of the property and then calculate the value of the property according to the ready reckoner rate using the below mentioned formula.
If it is a flat then use the formula-
- property built-up area x ready reckoner rate for flats in Rs per sq m.
- covered parking slots x 25% ready reckoner rate per unit area for that property
- open parking slots x 40% of ready reckoner rate of developed land in that zone.
To calculate circle rate in Delhi, you can go to the official e-Circle Rate Calculator online tool provided by the government. Similarly, the IGR Maharashtra portal helps one access the ready reckoner rates, Annual Statement of Rates.
Ready Reckoner rate: How does it affect real estate transactions?
While Ready Reckoner rates specify the minimum amount at which properties can be sold in an area, there is no maximum limit above which a property cannot be sold. This leads to a significant difference between the Ready Reckoner and market rates. Most property transactions in India take place on the basis of the market rate in a particular locality. The stamp duty and registration fees, to be paid by the home buyer, are calculated on the basis of this market rate. Therefore, a big difference between the RR rate and market rate, leads to a loss of revenue for the government. In rare cases where the RR rate is higher, the stamp duty and registration fees will be calculated on the RR rate. On the other hand, higher RR rates discourage home buyers from registering their properties. By periodically revising RR rates and bringing them closer to market rates in every locality, the state government can increase transparency in real estate transactions and also ensure that they do not lose out on revenue.
Ready Reckoner rates: Importance for home buyers
The RR rate of properties in a particular area, is a good indication of the amount of money a potential home buyer will have to shell out. Market rates of properties are almost always higher and property prices in an area tend to increase, when the RR rate is expected to be increased. It is also beneficial for buyers to purchase property in an area, where the difference between ready reckoner rate and market rate is relatively smaller, especially if the purchase is being financed by a home loan.
Stamp Duty and Property Registration Charges in Delhi
Present Stamp duty rates in Delhi
In Delhi, the stamp duty rate applicable is 4% for female property buyers and 6% for male property buyers. For joint owners, the stamp duty rate is 5%. There are various factors that impact the property registration charges in Delhi. These include location of the property, age of the property owner, gender, and category of property.
What are the documents needed for property registration in Delhi?
Property buyers in Delhi must submit various documents during the property registration process. These include:
- TDS payment proof
- Sale deed
- No objection certificate in case of land or plot
- Two passport size photographs
- Identity proof and address proofs of buyer, seller, and witnesses
- e Stamp paper, mentioning correct value of stamp duty
- e-Registration fee receipt with affidavit or undertaking
- Copy of Form 60/ PAN card, which is self-attested
Ready reckoner rates for properties in Delhi
| Category | Cost of construction Residential (per sq metre) | Construction cost Commercial (per sq metre) | Land cost (per sq metre) |
| A | Rs 21,960 | Rs 25,200 | Rs 7.74 lakhs |
| B | Rs 17,400 | Rs 19,920 | Rs 2.46 lakhs |
| C | Rs 13,920 | Rs 15,960 | Rs 1.6 lakhs |
| D | Rs 11,160 | Rs 12,840 | Rs 1.28 lakhs |
| E | Rs 9,360 | Rs 10,800 | Rs 70,080 |
| F | Rs 8,220 | Rs 9,480 | Rs 56,640 |
| G | Rs 6,960 | Rs 8,040 | Rs 46,200 |
| H | Rs 3,480 | Rs 3,960 | Rs 23,280 |
Ready reckoner rates for flats or apartments in Delhi
| Property area | DDA, society flats | Private builder flats |
| Multi storey apartments | Rs 87.840 | Rs 1.10 lakh |
| Above 100 sq metre | Rs 76,200 | Rs 95,250 |
| 50 sq metre to 100 sq metre | Rs 66,240 | Rs 79,488 |
| 30 sq metre to 50 sq metre | Rs 54,480 | Rs 62,652 |
| Up to 30 sq metre | Rs 50,400 | Rs 55,440 |
Where to find ready reckoner rates?
To know the current ready reckoner rates in a particular locality, it is important to check the government websites. The government revises the ready reckoner rates from time to time. To check the ready reckoner rate Mumbai, you can visit the IGR Maharashtra website. The Maharashtra government’s department of registration and stamps, is responsible for preparing an Annual Statement of Rates, i.e., the ready reckoner rates.
See also: All you need to know about IGR Maharashtra
Ready reckoner vs market rate: What is the difference?
Ready reckoner rates are values determined by the government based on which stamp duty is paid during property registration transactions in Delhi. On the other hand, market prices refer to the actual property prices based on which the property sale and purchase take place between sellers and buyers.
Ready Reckoner rates: Problem areas
In order to save taxes, buyers often collude with sellers and agree to register the property based on the circle rate, while the buyer is made to pay, based on the prevalent market rate. This helps sellers to save on capital gains tax, while it helps buyers in saving on stamp duty. The buyer simply makes the remaining payment to the seller though cash. This leads to revenue loss for the authorities. This is why authorities periodically change the RR rates, in order to keep it closer to the marker rate.
Impact of selling properties below the ready reckoner rates
The ready reckoner rate is the minimum value set by the government, based on which property transactions take place. If the transaction value is lower than the prevailing ready reckoner rates of a locality by 10% or more, it could lead to a tax burden on the buyer and the seller. According to Section 43CA of the Income Tax Act, selling a property at values at least 10% lower than the ready reckoner rate, also known as circle rate, can result in a penalty of 35% of the difference between the original price and the revised price. It will also be applicable on the property buyer.
The slowdown that the realty sector witnessed after the COVID-19 pandemic hit in 2020 and developments like demonetisation in the past, had led to significant rise in unsold inventories. Realty developers had struggled to sustain the margins with no further scope to cut prices. Consequently, in 2020, the Confederation of Real Estate Developers’ Associations of India (CREDAI) and the National Real Estate Development Council (NAREDCO) suggested that suitable amendments should be made in the income tax laws, along with changes in ready reckoner rates, to keep them in line with current market prices.
Ready reckoner rate: Impact on demand
Property buyers are required to pay stamp duty and registration charges during a property purchase. It is the state government that is responsible for collecting stamp duty and registration charges based on the ready reckoner rate or the actual market value, whichever is higher.
These charges are generally determined as a percentage of the transaction value paid by the property buyer, and it varies across states. In certain states, this value can be as high as 8 to 10% of the transaction value. Usually, it is difficult to find a location where properties have lower market value than the ready reckoner rates. However, if the market price that the buyer pays is lower than the RR rate, then stamp duty and registration charges are based on the defined RRR. Thus, additional charges in terms of stamp duty have to be paid, more than the actual market price. Sellers are also required to pay additional tax on capital gains. Hence, this may deter them from property sale or purchase below the RR rate. In case where market value and RR rate are aligned, property demand has a positive impact and benefits, buyers and sellers.
Ready reckoner rate Mumbai: Latest updates
In June 2021, the Brihanmumbai Municipal Corporation (BMC) had proposed to collect property tax based on the latest ready reckoner rates, which would increase the property tax by 14%, in a proposal from the Assessor and Collector Department made before the civic body’s standing committee. However, the increase will not impact properties below 500 sq ft. If approved by the standing committee, the revision of rules will come into effect from April 1, 2021 and will be applicable till March 31, 2025.
FAQs
What is guidance value or ready reckoner rate?
The minimum value at which a property can be registered is its guidance value. It is also known as ready reckoner rate in Maharashtra.
Who sets RR rates?
Land being a state subject, the authority to set RR rates lies with state governments.
Are RR rate same for every areas in one city?
RR rates are different from every area in a city.
How many times are RR rates revised in a year?
States can typically revise the rates once in a year.
What is the ready reckoner rate in Navi Mumbai?
You check the IGR Maharashtra website to get district-wise information about the ready reckoner rates. You can select the taluka and village to know the ready reckoner rates for a specific locality.
Vinita Menon is a content writer and social media manager with over three years of work experience, most of which has been in the Indian real estate industry. She writes research-based, long-form articles for real estate and travel websites and social media content for clients in varied industries, namely fashion and art.
Twitter: https://twitter.com/ViniMenon21
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