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Government to revise guidance value of properties in Karnataka soon, Real Estate News, ET RealEstate

Government to revise guidance value of properties in Karnataka soon, Real Estate News, ET RealEstate
BENGALURU: Property prices in the state may largely go up soon as the government is looking at revising guidance values.

A Central Valuation Committee (CVC) comprising senior officials of the revenue department is assessing guidance values in all districts and could submit its report this month, said a senior revenue department officer.

Guidance value is the base price of properties fixed by the government, and property registrations cannot go below it. Karnataka collects a duty of 5.65%, including cess and surcharge on transaction value, and a 1% registration fee on guidance value.

Mohan Raj, inspector-general of registration and commissioner of stamps, said, “Revision of guidance value is scheduled every year, but it didn’t happen over the last two years due to Covid-19. Now, it’s course correction to fix the gap between guidance value and prevailing market rates.’’

Though the quantum of increase is not finalised, revenue department sources said it could increase by at least 5%-10 %. In some places, it may drop as it has reached saturation point.

The revision is expected to boost revenue that has seen a decline in stamp duty fee of property registration due to the pandemic and lockdown, said another officer. For 2020-21, the revenue department’s target is Rs 12,655 crore.

The real estate sector was taken aback as it hoped for a cut in both guidance value and stamp duty of properties above Rs 45 lakh. Former revenue minister R Ashoka has often said his department will cut guidance value by 15%-20% in sync with corrections in property prices.

The Bengaluru chapter of the Confederation of Real Estate Developers’ Association of India (Credai) sought a 30% reduction in guidance value, citing Maharashtra and Delhi which slashed guidance value to encourage transactions.

Shabeer Sait, executive head of operations, Irshads Property Matters, said guidance values in some places are slightly lower (15% to 20%) than market rates and higher (20% to 25%) in some places.

“Necessary corrections are needed and a uniform reduction across all zones, even if it’s small, will help drive up sales and result in savings for customers. These savings will come back into the market via other expenditure by consumers, so effectively the government won’t lose much,” he added.

Monica Mathias, director, Hoysala Projects, said: “Reduction of guidance value helps buyers reduce overall price burden via lower stamp duty payment and sellers (in second transactions) benefit from reduced capital gains bill.’’


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Written by Realty Beat

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