Opinion - Letters to the Editor

Valuing properties

Sir, — The Finance Minister has introduced a new section, 50 C, in the Income Tax Act for the valuation of immovable properties sold after April 1, 2002. As per the new provisions, the value of the property will be determined based on the guideline value adopted by the registrar for the purpose of payment of stamp duty.

In most cases, particularly in Tamil Nadu, the guideline value adopted for the purpose of payment of stamp duty is unrealistic.

Real estate prices were soaring during the first half of the last decade and from 1996 onwards, there has been a heavy fall in value. But the State Government is still adopting the pre-1996 rates as the guideline value.

The Government made upward revision in the guideline value while the market prices were falling. If one is not satisfied about the value and feels that the market value is much below the guideline value, he can refer the matter to the collector of stamps under Rule 47-A. Since the collector of stamps is a quasi-judicial authority, he does not make any appreciable reduction from the guideline value. The revision against the collector's order is to be made before the collector himself. Further appeal has to be made before the civil court.

Till the appeals are disposed of, one cannot get back the registered sale deed from the Sub-Registrar, which may be required by the purchaser to prove the bona fide ownership or to extend the property as security or to make any further sale.

In view of the time and expenditure involved, the seller and the buyer reach a compromise and pay the stamp duty as per the guideline value to avoid litigation and mental agony. But the Minister has proposed to further penalise such compromises by taxing the notional income, being the difference between the guideline value and real market value.

K.V. Balasubramanian,
Chennai

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