Guide Lines Value are the estimated minimum value fixed by the Government for a property In a specified area for purposes of registration of sale deed on which stamp duty and registration charges are payable. These are the values fixed by the Department
of Registration & Stamps for purposes of registration of documents. It is
needless to say that the guidelines value would vary from one area to another.
This is also different from the prevailing market value of the property.
If the purchase value of a
property is more than the guide lines value, the stamp duty and registration
charges are to be paid on the purchase value. The guidelines value would change
as and when the value of properties would go up or down at the discretion of
the Government. The present guidelines value in Karnataka has been force with
effect from 19- April, 2007.
When the Government
increases the guide lines value, the price of properties begins to soar, when
the market value increases, the government enhances the guide lines value and
thereby the guide line value and the market value are trying to catch each
other in the race.
For many owning a house
has become a day dream in view of high cost of land and buildings and with the reduction of their purchasing power due to under- employment and unemployment.
At the same time, the property developers are finding it difficult to get
buyers for their properties despite their voluntary reduction in the value of
properties due to market crash on account of global recession. The rise and
fall of rates are natural phenomena in any business and the Government should
allow sector to have its natural course of settlement.
Government has a social obligation to cater to the housing needs of the public. Such affordable houses
need not be small hutment, but should at least have minimum requirements like
bedroom, kitchen, toilet, hall etc, with sufficient ventilation. By frequent
abnormal increase in Guide lines value, the poor and the middle class people
are finding it difficult to purchase the houses. Real estate investment is
becoming the exclusive domain of rich and influential. The government has a
duty to not to fuel the price rise. The Government itself is subverting its
social obligations.
Stamp duty and Registration
Charges
Stamp duty and
registration charges are very high in Karnataka. As and when the guidelinesvalue increases, payment of stamp duty and registration charges also increases
and thereby there is an additional burden on the purchaser of a property. Apart
from these charges, the purchaser has to pay sales tax, service tax and charges
for transfer of Khatha, power and water connection deposits, etc., and whereas
the seller has to pay capital gains tax' in respect of the gain he made in the
sale transaction.
Due to the increase in stamp duty and registration charges naturally, the parties to a sale
transaction prefer to disclose the deflated value of the property in the
conveyance deed and avoid payment of higher stamp duty and registration
charges. This, in turn, has lead to accumulation and circulation of black money
in the country. Some people may even opt for holding the property by way of
General Power of Attorney and by executing an affidavit declaring delivery of
possession of the property to the purchaser. Through this method, the people
avoid execution and registration of sale document which in turn leads to
reduction in the collection of revenue to the State exchequer. State Government
should adopt the well established principle that lower the stamp duty and
registration charges higher the revenue collection for the State exchequer.
With the increase in the
rate of the Guide lines value of a property in a particular locality, the
property owner's liability of municipal tax also goes up and thereby an additional burden is cast on the citizen. Home loans Banks and Financial institutions were very liberal in extending home loans till recently.
Providing housing loan to
people was considered as a national cause in fulfillment of the obligation of
providing shelter to a large number of people. However, the quantum of housing
loan granted to the borrowers would depend upon their repaying capacity. As the
price of the properties increase on account of revised guideline values, the
borrowers of housing loan may require higher amounts to purchase the properties
and their regular income do not match with the requirement of the bank and
thereby the borrowers have to curtail their actual housing requirement and may
have to be content with a small or substandard property.
The tax on profit earned
on transfer of an immovable property has to be paid by the seller. It may be
kept in mind that if the value of the property disclosed in the sale deed is
lesser than the guide lines value, capital gains tax is payable on the basis of
guide lines value. In some cases, the market value of the property is less than
guide lines value and the seller may incur loss. Even in such cases, the guide
lines value will be taken as the basis for calculating the capital gains tax
and the seller has to pay the tax accordingly. In cases where the declared
value of a property in the sale deed is more than the guide lines value, the
declared value shall be taken as the basis for calculating the capital gains
tax.
The general public has no
clear cut guidelines as to the documents which are required to be submitted at
the time of registration along with the sale deed. This should be made known to
the public by giving wide publicity through and electronic media. Not only may
this, the address, telephone number of the sub-registrar offices and their
jurisdiction be displayed at prominent public places for information of the
public. The Government should implement user friendly measures; reduce the stamp duty and registration charges to come within the reach of poor and middle class. Introduction of the online registration system will also be useful to
the public.
Since there is global
recession presently, the State Governments should fall in line with the
property developers and commercial banks and without delay reduce the
guidelines value which were fixed. when the property values were at their peak
since there is considerable slash in the value of properties and the property
developers are offering discounts and free-bees to market their unsold
properties while at the same time the purchasing power of the people has come
down. When all the concerned are trying to lift the real estate sector from
collapse, the State Governments' delaying in reducing the guidelines value is unfair and can be termed as a failure of social obligation cast on them.
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