Delhi's Property Valuation Overhaul: Aligning Circle Rates with Market Prices
New Delhi: Delhi is gearing up for a major circle rate overhaul for the first time in more than a decade, with the government considering sweeping structural changes aimed at aligning property valuations with real market prices.
Among the key proposals under discussion are the introduction of a new A+ category for ultra-premium Lutyens' Delhi, a complete reworking of farmhouse valuations, location-based pricing, and a review system to keep rates in sync with market fluctuations. A senior official said the A+ bracket has been suggested by stakeholders because several Lutyens' Delhi localities, where real estate prices often far exceed even the highest notified rates, currently sit in Category A, which does not reflect their vastly higher market value.
The gap between notified rates and transaction values in these areas is among the widest in the city, an official noted. Another major thrust of the upcoming revision will be farmhouses, especially in the urbanized belts of south Delhi, where properties routinely sell at extremely high prices, host commercial-scale events such as weddings, and function as luxury residences. Many farmhouses continue to be valued at agricultural rates despite being part of urbanized Delhi. Their circle rates barely vary from those in outer Delhi, creating a massive mismatch, a senior official said.
New proposals could suggest that farmhouse rates be location-based and benchmarked to prevailing real estate values, replacing the outdated agricultural valuation system. Experts have long argued that this mismatch results in substantial loss of revenue to the government. In Delhi's case, the gap is bigger because circle rates for residential/commercial properties were last revised in 2014, and for agricultural land in 2008. Circle rates in many high-end colonies are significantly lower than market prices, resulting in large cash components in deals, artificially low property valuations on paper, and lower stamp duty collections. In contrast, a few localities have circle rates that are actually higher than their current market values, and these are expected to be rationalized downward.
Currently, Delhi is divided into eight categories (A–H), with rates ranging from Rs 7.74 lakh per sqm in Category A to Rs 23,280 per sqm in Category H. However, officials said that development levels within the same category vary widely. For instance, Golf Links and Kalindi Colony are in Category A, despite stark differences in real estate prices, civic amenities, and infrastructure. The exercise is being carried out by a committee headed by the divisional commissioner, constituted in June by Chief Minister Rekha Gupta. Officials said the proposal may include both upward and downward revisions and will factor in public feedback before being placed before the CM, who handles the revenue portfolio.
