If you're planning to buy or sell property in India, understanding terms like circle rate, market rate, and stamp duty is crucial.

These elements not only influence your final transaction value
but also determine the taxes and legal compliance involved.

In this blog, we’ll break down these three concepts and explain how they impact property
transactions across India.

What is Circle Rate?

Circle Rate (also known as Ready Reckoner Rate or Guideline Value) is the minimum rate set
by the government for the sale or transfer of property in a specific area.

It varies from location to location and is revised periodically by local authorities. Buyers are not
allowed to register a property below this rate, even if the actual transaction is done at a lower
price.

Example:

If the circle rate in a locality is ₹5,000 per sq. ft. and you're buying a 1,000 sq. ft. apartment, the
minimum registration value would be ₹50 lakh.

What is Market Rate?

The Market Rate is the actual price at which properties are bought and sold in a locality. It is
driven by demand, location, infrastructure, and market trends.

In many cases, the market rate is higher than the circle rate, especially in urban or rapidly
developing areas.

Example:

If the market rate in the same area is ₹7,000 per sq. ft., the same apartment may cost you ₹70
lakh, although the circle rate remains ₹5,000.

Stamp Duty: The Legal Tax

Stamp Duty is a tax paid to the government when a property is transferred from one person to
another. It is calculated on the cheque value piad by the customer which is the minimum the circle rate or more.
The percentage of stamp duty varies by state and also depends on factors like:

• Type of property (residential/commercial)
• Location (urban/rural)
• Gender of the buyer (some states offer concessions to women)
• Usage (primary residence vs investment)

Common Stamp Duty Ranges:

• Maharashtra: 5% (with rebates in certain cases)
• Delhi: 4%-6%
• Karnataka: 2%-5%

Why the Gap Between Circle Rate and Market Rate Matters

A large gap between circle rate and market rate may lead to:

• Higher out-of-pocket expense due to stamp duty on the cheque purchase value
• Legal complications if undervaluation is attempted during registration
• Difficulty in getting full-value loans since banks may consider the circle rate for
  valuation

How to Find Circle Rate in Your Area

You can check the circle rate from your state government's revenue or property registration
department website.