Delhi - Under Tail Spin

The Government of Delhi has revised the circle rate under the Indian Stamp Act for the purpose of payment of stamp duty very substantially as per the Notification No.F.1(953)/Regn. Br./Div. Com./HQ/2014/5943 dated 22nd September, 2014. The modification has come into force from 23rd September, 2014 and has created a big havoc in the real estate market. The circle rates in most of the areas are substantially higher as compared to the market rate prevalent in Delhi, specially in case of commercial, industrial and public utility land uses where the circle rates are multiplied by 2 in case of industrial and public utility uses and multiplied with 3 in case of commercial uses. This situation have not only put additional burden of phenomenal stamp duty to be paid on transfer of properties but have also brought in an additional burden on the buyers as well as on the sellers. In terms of deeming provisions of Section 50C and Section 56 of the Indian Income Tax Act, the difference between the actual transaction rate and the stamp duty circle rates have to be treated as income separately in the hands of buyer as well as in the hands of the seller, unless they are able to prove that the actual market rate is different based on valuation done by the tax department.