Delhi to Introduce 'A+' Property Zone: Government Reviews Circle Rates for Lutyens' Area and Farmhouses

The Delhi government is actively reviewing a series of suggestions to revise circle rates in the capital. These proposals include the creation of a new 'A+' category for premium areas in Lutyens' Delhi, a comprehensive overhaul of farmhouse rates, biennial reviews, greater data transparency, and the formation of a stakeholder committee.

The government had sought public feedback on the proposed revision and is now evaluating the submissions before finalizing the new rates. Circle rates, which are the minimum rates for the valuation of land and immovable properties in residential, commercial, and industrial areas, are often lower than market rates. This discrepancy promotes cash transactions and results in revenue loss for the government.

"The suggested measures will improve transparency and accuracy in property valuation and registration. They will also increase stamp duty collection and registration revenue, leading to greater compliance and investor confidence," said Amit Goyal, Managing Director of India Sotheby's International Realty. "We believe that the creation of an A+ category and a rationalized rate structure across categories A-H will modernize Delhi's valuation framework and align it with current market realities, ensuring fairness, transparency, and enhanced revenue efficiency."

In many of Delhi's high-end colonies, the circle rate is significantly lower than the market rate, which encourages buyers to pay part of the amount in cash. This practice keeps the property's value low on paper, attracting lower stamp duty. However, in some colonies, the circle rate is higher than the market rate, which can discourage transactions.

Anshuman Magazine, Chairman and CEO of CBRE for India, South-East Asia, Middle East & Africa, commented, "The Delhi government's decision to review circle rates is a timely move, given that the last revision took place over a decade ago, in 2014. The revision is expected to bring greater alignment between notified and prevailing market values, thereby enhancing transparency and boosting confidence among homebuyers, investors, and developers alike."

Experts have recommended the introduction of a new category A+ for areas such as Amrita Shergil Marg, Prithviraj Road, Dr APJ Abdul Kalam Road, Tughlaq Road, Golf Links, and Jor Bagh. These locations command benchmark prices far above other category A areas, often exceeding ₹12-₹15 lakh per square metre in open-market transactions. A realistic circle rate for this new category should be set at ₹10 lakh per square metre, it has been suggested.

The revenue department is actively considering these suggestions, as they could help improve the real estate market in the capital. Experts have also called for an overhaul of the circle rates for farmhouses, which are increasingly classified as part of urbanized Delhi but continue to be valued at agricultural rates. These rates range from ₹54 lakh to as high as ₹30 crore per acre, creating a significant mismatch.

"Farmhouse circle rates should be benchmarked to and differentiated by geographical zones. This will align valuations with reality, enhance transparency, and plug significant revenue leakages to the exchequer," said Goyal.

Legal experts have highlighted certain basic and fundamental gaps in the present concept of circle rates. "The notification relating to the Prevention of Undervaluation Rules, which enumerates and provides the structural guidelines and framework for the mode of calculation of circle rates, lacks pragmatic market considerations," said Gaurav Gambhir, a lawyer focused on real estate cases.