PERMANANT VALUATION CELL FOR THE REVISION OF GUIDELINE VALUE OF PROPERTIES IN KARNATAKA


THE GOVERNMENT HAS APPROVED THE INSTITUTION OF A REGULAR VALUATION CELL FOR THE REGULAR VALUATION OF PROPERTIES ACCORDING TO MARKET PRICES OF THE PROPERTIES FOR THE REGISTRATION. IT IS EXPECTED THAT THE GENERATION OF REVENUE FROM THE REVALUATION OR REVISION OF THE GUIDANCE VALUE ACCORDING TO THE MARKET TRENDS OR MARKET PRICES, WILL BE AROUND RS6500 CRORES, A JUMP OF ALMOST RS2000 CRORES FROM THE ESTIMATED REVENUE.

 

 

PROPERTY PRICES SET TO RISE IN BANGALORE


THE GOVERNMENT IS SERIOUS ABOUT INCREASING THE STAMP DUTY ON THE REGISTRATION OF PROPERTIES AND THE GUIDANCE VALUE MIGHT BE BROUGHT TO THE MARKET RATE COUPLED WITH 1% TDS ON THE VALUE OF THE PROPERTIES WHICH EXCEED RS 50 LAKHS AND ABOVE, AS PER THE RECENT FINANCE ACT, WILL  INCREASE THE PRICE OF THE REALTY MARKET IN BANGALORE.

IN ORDER TO GENERATE ADDITIONAL REVENUE TO MEET THE DEFICIT OF THE BBMP, THE PROPERTIES WHICH ARE IRREGULAR WITH DEVIATION AND VIOLATION MAY BE BRANDED DIFFERENTLY AND TAXED ACCORDINGLY TILL IT GETS REGULARISED AND THE TAX SLABS MUST BE 3 TIMES GREATER/HIGHER THAN THE OTHER PROPERTIES.

This proposal may not be practical as there will be stiff opposition from the VIOLATORS AND DEVASTATORS.

 

REGISTRATION EXPENSES MAY GO UP SOON FOR PROPERTIES IN KARNATAKA


THE STATE GOVERNMENT MAY REVISE THE GUIDELINE VALUES OF THE PROPERTIES AND MIGHT INCREASE THE STAMP DUTY ON THE REGISTRATION OF PROPERTIES IN KARNATAKA, VERY SOON.

PROPERTY REGISTRATION CHARGES AT BANGALORE


THE STAMP DUTY IS 5.6% ON THE GUIDANCE VALUE OR THE MARKET VALUE OR THE CONSIDERATION SHOWN IN THE DOCUMENT- WHICHEVER IS HIGHER. IT IS APPLICABLE FOR BBMP LIMITS PROPERTY.

THE REGISTRATION FEE IS 1% ON THE GUIDANCE VALUE OR THE MARKET VALUE OR THE CONSIDERATION SHOWN IN THE DOCUMENT- WHICHEVER IS HIGHER. IT IS APPLICABLE FOR BBMP LIMITS PROPERTY.

THE TOTAL EXPENDITURE/EXPENSES/FEE/CHARGES IS 6.6%.

STAMP DUTY AND REGISTRATION FEE FOR PROPERTIES IN BBMP LIMITS


STAMP DUTY: 6.72% OF THE GUIDANCE VALUE OR THE CONSIDERATION AMOUNT SHOWN IN THE SALE DEED,WHICHEVER IS HIGHER.

REGISTRATION FEE: 1% OF THE GUIDANCE VALUE OR THE CONSIDERATION AMOUNT SHOWN IN THE SALE DEED,WHICHEVER IS HIGHER.

TOTAL: 7.72%.

IT IS APPLICABLE FOR SITES, HOUSES, APARTMENTS AND ALL TYPES OF PROPERTIES.

HOME LOANS AND RBI DIRECTIVES – TAX EVASION BY THE BUYERS IS UNDER SCRUTINY


RBI HAS DIRECTED ALL THE BANKS NOT TO OVER VALUE THE PROPERTIES WHICH INCLUDES STAMP DUTY, REGISTRATION FEE, SERVICE TAX, VAT AND OTHER ADDITIONS, WHILE PROCESSING THE HOME LOANS, AS THE REGULATOR RECEIVED COMPLAINTS OF SUCH DISCREPANCIES BY SOME OF THE BANKS.

THE INCOME TAX DEPARTMENT IS EXAMINING THE HOME LOANS APPLICATIONS AND SANCTIONS AS IT IS NOTICED THAT MANY ASSESSEES HAVE FILED THE TAX RETURNS, WHICH HAVE SOME UNDISCLOSED TRANSACTIONS, TO AVOID THE PAYMENT OF TAXES.  

THE BUYERS ENTER INTO AN AGREEMENT OF SALE WITH THE BUYER FOR XXXXX PRICE AND SUBMIT THE SAME FOR HOME LOAN SANCTION AND REGISTER THE SAME PROPERTY FOR THE LESSER VALUE TO AVOID OR EVADE INCOME TAX, STAMP DUTY AND REGISTRATION FEE.  THE INCOME TAX DEPARTMENT IS COLLECTING INFORMATION OF SUCH TRANSACTIONS AND TAX EVADERS WILL BE PENALISED.  THEHOME LOAN BUYERS ENTER INTO A SALE AGREEMENT FOR THE ACTUAL VALUE OF THE  PROPERTY OR HIGHER VALUE OF THE PROPERTY TO AVAIL LOANS AND AT THE TIME OF REGISTRATION, REGISTER THE SAME FOR LESSER VALUE TO EVADE INCOME TAX, SALES TAX, SERVICE TAX, STAMP DUTY AND REGISTRATION FEE. 

 

PROPERTY BUYERS WHO HAVE AVAILED LOAN HAVE ALSO ENTERED INTO SEVERAL DUBIOUS AGREEMENTS AND THE BUILDERS COLLECT THE PAYMENT UNDER VARIOUS HEADS AND IN DIFFERENT NAMES, BUT ARE CAUGHT, AS THEY HAD ENTERED INTO THE AGREEMENT OF SALE AND THESE ARE OFFICIALS DOCUMENTS, BASED ON THESE DOCUMENTS THE LOAN IS SANCTIONED.

GUIDANCE VALUES REVISED AND EFFECTIVE FROM TODAY


THE DEPARTMENT OF STAMPS AND REGISTRATION HAS NOTIFIED THE REVISED VALUE FOR THE PROPERTY REGISTRATION IN BANGALORE RURAL DISTRICT AND RAMANAGARAM DISTRICTS FROM TODAY.  THE REVISION IS IN THE RANGE OF 30% TO 150%.  THE REVISED VALUES FOR THE BANGALORE URBAN DISTRICT HAS NOT YET BEEN FINALISED AND IS UNDER CONSIDERATION WILL SOON BE NOTIFIED.

NEW GUIDANCE VALUES- DELAYED


IT IS RELIABLY LEARNT THAT THE PROPOSED REVISION OF GUIDANCE VALUE OR THE VALUE AT WHICH THE STAMP DUTY IS COLLECTED FOR THE REGISTRATION HAS NOT YET BEEN NOTIFIED.  THE GOVERNMENT IS WAITING FOR THE NEW REVENUE MINISTER TO TAKE UP THIS ISSUE AND NOTIFY THE SAME. THE BUYERS CAN HAPPILY REGISTER THEIR PROPERTIES AT THE OLD RATES TILL FURTHER ORDERS.

MISCONCEPTION ABOUT THE MARKET PRICE AND GUIDANCE VALUE


THE SELLERS ARE IN GREAT MOOD HOPING THAT THE PRICES OF THE PROPERTIES HAVE GONE UP WITH THE REVISION OF GUIDANCE VALUE.  THIS IS A MISCONCEPTION. IN REALITY, THERE WILL NOT BE GOOD DEMAND FOR THE PROPERTIES DUE TO THE REVISION AND INCREASE.

THE REASONS ARE:

THE SELLERS HAVE TO PAY ADDITIONAL STAMP DUTY AND REGISTRATION FEE TO THE EXTENT OF THE INCREASED VALUE.

THE SELLERS MUST ALSO HAVE INCOME TAX (ACCOUNTED MONEY) TO THE TUNE OF THE GUIDANCE VALUE.

NORMALLY ALL THE PROPERTIES ARE UNDERVALUED TO EVADE STAMP DUTY AND REGISTRATION FEE AND THE MOST IMPORTANT ASPECT IS THAT THE INCOME TAX DEPARTMENT TREATS OR ASSESSES THE VALUE OF THE PROPERTY AS PER THE GUIDANCE VALUE OR THE GOVT VALUE OR IF THE VALUE OR CONSIDERATION IS PAID ABOVE THE GOVT/GUIDANCE VALUE AND NOT FOR THE VALUE SHOWN IN THE SALE DEED.

IN CASE, IF THE SALE VALUE OR CONSIDERATION SHOWN IS LESS THAN THE GUIDANCE/GOVT VALUE, THE INCOME TAX DEPARTMENT WILL LEVY PENALTY AND ASSESS IT TO THE TAX PURPOSE AT THE GUIDANCE VALUE.

DUE TO THE AFORESAID FACTORS, THE PRICES WILL NOT INCREASE BUT WILL DEFINITELY HAVE A DISCOURAGING TREND. 

WITH THE REVISION ALL THE REVENUE AND(GOLMA)L PROPERTIES WITH( BOGUS) GPA ARE IN QUANDRY.  EVEN, IF THEY UNDERGO SURGERY UNDER AKRAMA-SAKRAMA, THE PENALTY WILL BE BASED ON THE GUIDANCE VALUE.  IF ANY OF THESE GPA PROPERTIES HAD TO BE REGISTERED NOW, IT WILL BE AT THE NEW REVISED GUIDANCE VALUE.

WELCOME- PLEASE SHARE YOUR IDEAS, VIEWS AND OPINIONS ON COMMON SUBJECTS AND ISSUES WITH OTHER READERS ON OUR FORUM


WE INVITE ALL OUR FRIENDS TO SHARE THEIR IDEAS, VIEWS, OPINIONS AND EXPERIENCES WITH OTHERS THROUGH OUR FORUM BY SENDING ARTICLES FOR PUBLICATION ON THE FOLLOWING SUBJECTS:

ENVIRONMENT

SOCIETY

GOVERNANCE

BUSINESS

PROPERTY

INCOME TAX, WEALTH TAX, GIFT TAX, VAT, SERVICE TAX, BBMP TAX, STAMP DUTY, REGISTRATION FEE, PROFESSION TAX AND OTHER ALLIED SUBJECTS

LEGAL ISSUES AT BANGALORE ON PROPERTY MATTERS

FEEL FREE TO FORWARD OR MAIL THE ARTICLES TO US AT ecopackindia@live.com.

THE ARTICLES OR SUBJECTS WILL BE MODERATED AND SELECTED SUBJECTS WILL BE PUBLISHED.

SALE AGREEMENT- STAMP DUTY ON SALE AGREEMENT IS SLASHED TO 0.1% FROM 01-04-2011


THE GOVERNMENT OF KARNATAKA HAS REDUCED THE STAMP DUTY ON THE SALE AGREEMENT OF APARTMENTS FROM 01-04-2011 TO 0.1% ON THE SALE CONSIDERATION,  BUT HAS INCREASED THE STAMP DUTY ON THE JOINT DEVELOPMENT AGREEMENTS.

FAIR MARKET VALUE OF PROPERTIES- UNDER VALUATION WILL BE TAXED UNDER SECTION 56 OF INCOME TAX ACT


FAIR MARKET VALUE OF PROPERTIES FROM 01-10-2009

Effective 1/10/2009, difference of over Rs. 50,000 between fair market value and purchase value of immovable property will be taxed as income from other sources in the hand of the buyer if buyer is an individual or HUF. Property is as defined in Section 56 and includes immovable property,  jewellery, shares and securities, work of art, drawings, paintings etc.

In case seller is a relative as defined in this same section, the difference in value will not be taxed. However, you have to produce to the AO an Affidavit from Seller establishing that he or she is your relative and that the property is being sold to you for a consideration of lower than the market value. This affidavit has to be stamped as per law of the state having jurisdiction of the AFFIDAVIT (not necessarily the same as state where the property is located). the stamp duty and registration of the immovable property is payable at the value assessed by the state of location of the immovable property.

For fair market value:-

1) Value determined by stamp duty officer for immovable property.

2) Gold and silver jewellery value will be as per date of sale of the jewellery . Ditto for Shares and Securities if listed. If not listed, a valuation will have to be carried out for these properties.

3) Works of Art, Drawings and Paintings will be as per value determined by valuation officer and may always be subject to litigation.

This is indeed a double whammy as Government has resorted to double taxation to curb black money menace. The seller of property already has to pay CG Tax based on the value determined by stamp duty officer if higher than sale price. The buyer of the property has to pay the tax on IFOS if aggregate difference on all properties purchased by him + other credits is over Rs. 50,000 in a year.

It may be better if buyer pays fair market value to seller so both will save on taxes.

Buyers are advised to consult  Chartered Accountants before the purchase of properties.

 

INCOME TAX DEDUCTIONS UNDER 80C80C,80CCC, 80D, 80DD,80DDB,80G , 80GG, 80GGA, 80GGC , 80IAB , 80IB , 80IC , 80ID ,80IE , 80JJA , 80QQB ,80RRB , 80U


Sl No Section Details of deductions Quantum
1 80C General deduction for investment in PPF,PF,Life Insurance, ULIP, Stamp duty on house, Fixed deposits for 5 years , bonds etc Maximum Rs 1 ,00,000 is allowed.

Investment need not be from taxable income.

2 80CCC Deduction in case of contribution to pension fund. However, it should be noted that surrender value or employer contribution is considered income. Maximum is Rs 1,00,000
3 80CCD Deduction in respect to contribution to new pension scheme. Employees of central and others are eligible. Maximum is sum of employer’s and employee’s contribution to the maximum : 10 % of salary.
4 It should be noted that as per section 80CCE , the maximum amount of deduction which can be claimed in  aggregate of 80C ,80CCD & 80CCD is Rs 1,00,0000
5 80D Medical insurance on self, spouse , children or  parents Rs 15,000 for self , spouse & children

Extra Rs 15,000 for insurance on parents. IF parents are above 65 years, extra sum should be read as Rs 20,000

Thus maximum is RS 35,000 per annum

6 80DD For maintenance including treatment or 7insurance the lives of physical disable dependent relatives Rs 50,000 . In case disability is severe , the amount is Rs 75,000.
7 80DDB For medical treatment of self or relatives suffering from specified disease Acutal amount paid to the extent of Rs 40,000. In case of patient being Sr Citizen , amount is Rs 60,000
8 80E For interest payment on loan taken for higher studies for self or education of spouse or children Actual amount paid as interest and start from the financial year in which he /she starts paying interest and runs till the interest is paid in full.
9 80G Donations to charitable institution 100% or 50% of amount of donation made to 19 entities (National defense fund , Prime minister relief fund etc. )
10 80GG For rent paid. This is only for people not getting any House Rent Allowance. Maximum is Rs 2000 per month.  Rule 11B is method of computation.
11 80GGA For donation to entities in scientific research or rural development f Only those tax payers who have no business income can claim this deduction .Maximum is equivalent to 100 % of donation.
12 80GGC For contribution to political parties 100 % of donations
13 80QQB Allowed only to resident authors for royalty income for books other than text book Royalty income or Rs 3,00,000 whichever is less.
14 80RRB For income receipt as royalty on patents of resident individuals Actual royalty or Rs 3,00,000 whichever is less.
15 80U Deduction in respect of permanent physical disability including blindness to taxpayer RS 50,000 which goes to Rs 75,000 in case taxpayer is suffering from severe disability.