Construction Industry News
Property costs in Karnataka may considerably surge soon as the government intends to revise the guidance values.
A senior revenue department official told the media that a Central Valuation Committee (CVC) involving senior officials of the revenue department is evaluating guidance values in all districts and could present its report this month.
Guidance value is the base price of properties set by the government, and property registrations cannot go lesser than it. Karnataka collects a duty of 5.65%, involving cess and surcharge on transaction cost, and a 1% registration fee on guidance value.
The inspector general of registration and commissioner of stamps, Mohan Raj, told the media that the revision of guidance value is scheduled every year, but it did not take place in the past two years because of the Covid-19 pandemic. Now, it’s a course revision to settle the gap between guidance value and current market prices.
Though the quantum of increase is not finalised, revenue department sources told the media that it could rise by at least 5% to 10%. In some places, it may decrease as it has met the saturation point.
Another officer told the media that the revision is likely to enhance the revenue that has witnessed a drop in stamp duty fee of property registration because of the pandemic and lockdown. The goal of the revenue department is Rs 12,655 crore for 2020-21.
The real estate sector was taken aback as it hoped for a dip in both guidance value and stamp duty of properties more than Rs 45 lakh.
The Bengaluru chapter of the Confederation of Real Estate Developers' Association of India (CREDAI) tried a 30% decline in guidance value, indicating Maharashtra and Delhi, which slashed guidance value to boost transactions.
Shabeer Sait, executive head of operations, Irshads Property Matters, told the media that guidance values in some places are slightly less (15% to 20%) than market rates and higher (20% to 25%) in a few places. Significant improvements are required, and a uniform cut over all zones, even if it is small, will aid push up sales and lead to savings for customers. These savings will return to the market through other expenditures by consumers, so efficiently the government would not lose much.
Hoysala Projects Director, Monica Matthias, told the media that a decrease of guidance value benefits buyers reducing overall price burden via lower stamp duty payment, and sellers (in second transactions) benefit from lowered capital gains bills.
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