i am purchasing a flat in an ongoing project at the rate below than the circle rate.

Q: i want to purchase a flat in an ongoing project where prevailing circle rate is 4000/sqft. but builder is ready to book it @ 3700/sqft. do i or the builder have to pay capital gain tax or any other kind of tax. is it right to purchase a flat @ below the circle rate. pls. clarify.

Nitish kumar,

11th March 2016

Buying property in EM Bypass, Kolkata

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Hi,
Remember, you may buy and sell a property at any mutually agreed price but the fact is that when you go to register the said property in the office of the sub-registrar, you would find that the official, supposed to register your property deal, would compare the sale consideration as mentioned in the sale deed with the fair market value of the property. The rate so fixed is known as the “circle rate”. Now if the sale consideration as mentioned in the sale deed is lower than the circle rate, the stamp duty would be calculated as per the value prescribed for circle rate.

Diptarishi dev, Kolkata

14th March 2016

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Yes, in sale deed you can mention the fair market value but when document is submitted for registration stamp duty would have to be paid at the circle rate.

For this purpose of calculation of capital gains circle rate would be taken into consideration and not the price mentioned in sale deed.

Anish Mazumder, Kolkata

14th March 2016

Till now, if the valuation of a property was lower than the prevailing circle rate, the registrar summarily rejected it. But Delhi High Court has recognized that there may be various reason for low valuation, such as a property being disputed, having unauthorized occupants, poor location etc.

But as per Section 47A, anyone can register sale of property below the local circle rate. Over time, the government had come to treat circle rate as the absolute measure of registering properties, despite the Stamp Act giving room for activity.

Anish Mazumder, Kolkata

14th March 2016

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