Higher circle rates have hurt the real estate market badly. The taxes have to be paid on the circle rates. If someone sells an apartment at a lower rate than the circle rate, he will eventually end up paying capital gains tax at the prevailing circle rate. The buyer on the other side has to pay higher stamp duty when the actual selling price is lower than the circle rate. To boost the housing demand and sales, Finance Minister Nirmala Sitharaman on Thursday announced a reduction of circle rate for residential units of value up to Rs. Two crores. The permitted differential between the agreement value and circle rate as per the current mandated limit is 10 percent. Now this differential permitted is 20%.
It will help in reducing the tax liability as the tax will be applicable to the lower value of residential units. The decision has been taken to boost the sale of housing units as demand is low and the supply of units higher. Check the housing projects which one can select to take the advantage of the slash in circle rates.