Guide Lines Value are the estimated minimum value fixed by
the Government for a property In a specified area for purposes of registrationof 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 differentfrom 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 thepurchase 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 guidelinesvalue in Karnataka has been force with effect from 19- April, 2007.
When the Government increases the guide lines value, the priceof properties begins to soar, when the market value increases, the government
enhances the guide lines value and thereby the guide line value and the marketvalue 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 dueto under- employment and unemployment. At the same time, the propertydevelopers 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 needsof 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 are very high inKarnataka. As and when the guidelines value 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 andregistration charges. This, in turn, has lead to accumulation and circulation
of black money in the country. Some people may even opt for holding the propertyby way of General Power of Attorney and by executing an affidavit declaringdelivery 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 Governmentshould adopt the well established principle that lower the stamp duty andregistration 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 municipaltax also goes up and thereby an addi- tional 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 onaccount 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 substandardproperty.
The tax on profit earned on transfer of an immovableproperty 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 sellermay 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 deedis more than the guide lines value, the declared value shall be taken as thebasis 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 onlineregistration 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 commercialbanks 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.
No comments:
Post a Comment