With the offer of up to 50% rebates by the Noida and Greater Noida administration, the cost of registering commercial and institutional properties - shops and office spaces, for instance will come down significantly. This will be a great relief for investors too in group housing societies as registering flats will also see a decrease because of surcharges being reduced on common facilities.
District magistrate B N Singh on Wednesday announced steep rebates in circle rates across categories to boost investment in the twin cities where the real estate market is in a prolonged slump with flat deliveries running years behind schedule and commercial properties witnessing tepid demand. The slowdown in the realty market has also affected the government’s revenues — of the Rs 2,522 cr it expected to mop up in 2017-18, collections accounted for only around 67%.
This is the first time the administration has proposed to reduce circle rates, albeit through rebates, in the last six years. The administration has invited feedback from stakeholders for 10 days after it will send its report to the government. The revised circle rates will be effective from August 1.
Circle rate is the minimum value at which sale or transfer of property takes place. Properties in the twin cities are classified in six categories – group housing projects, residential, commercial, industrial, institutional and IT. Circle rates differ for each. No rebates have been announced for the residential and industrial categories.
But for group housing, which accounts for a bulk of new homes in the twin cities, the administration has brought down the surcharge on common facilities by up to 9%, depending on which facilities are on offer. So far, the applicable charges were 3% each on power backup, lifts, community centre/club, swimming pool and gym (15% if all five were offered by a developer). The charges on power backup and lifts have now been waived and for the three other components, they have been cut to 2% each (a maximum of 6% if all five are offered).
District magistrate B N Singh said, “We have excluded power backup and lifts from circle rate calculation since they are integral parts of a highrise society.” Stamp duty is 5% of the combined value of a project — the cost charged by a developer and surcharges applicable.
In commercial category, the rebates announced range between 15% and 45%, depending on which floor the property is in. In the institutional segment, the rebates are in the range of 20% to 50%. Singh said entrepreneurs had started operating factories/companies and other units on rented premises and sale of property had significantly decreased. The sale and purchase yields a significant chunk of revenue to the state exchequer while the businessmen on rented premises pay only 2% as taxes of their annual rent payment.
“In the commercial category, there is a rebate of 15% on registration of ground floor properties and 25% for lower ground, upper ground and mezzanine floors and the basement and first floor. Buyers can also avail 35% rebate on registration of second-floor property,” Singh said. The rebate for the third floor is 45%.
Officials said they have proposed the rebate in a planned manner to ensure the move does not affect farmers who would get compensation for their acquired land. No change has been proposed in the Dadri and Jewar areas.
ADM (finance) Keshav Kumar said the reduction was in the form of rebates and not a slash in circle rates. “The rebates have been given to boost investment. Circle rates have not been reduced per se. The existing circle rates remain in force,” he said.
The move was welcomed by Credai but it would like the government to actually reduce the circle rates by 20% for residential and 50% in the commercial category if the government really intends to revive the realty market.