1)you may buy and sell a property at any mutually agreed price but the fact is that when you go to register the said property in the office of the sub-registrar, you would find that the official, supposed to register your property deal, would compare the sale consideration as mentioned in the sale deed with the fair market value of the property. The rate so fixed is known as the “circle rate”. Now if the sale consideration as mentioned in the sale deed is lower than the circle rate, the stamp duty would be calculated as per the value prescribed for circle rate
2) for the purpose of calculation of capital gains circle rate would be taken into consideration and not the price mentioned in sale deed .