Order on guideline value a boon

Order on guideline value a boon

The Hindu

Changes ensure it is in line with market value

# Crucial amendments were introduced in 1999 to Stamp Act
# Revision of guideline value prevents undervaluation

BANGALORE: The Karnataka High Court order upholding the validity of amendments to the Karnataka Stamp Act on Monday last has come as a boon to the Government, which authorised local revenue committees to fix the guidance value based on the realistic market value of immoveable property.

The amendments were introduced in 1999 by the then Revenue Minister B. Somashekar, who is now the Janata Dal (United) State unit president. By virtue of the High Court order, the Government is now expected to streamline the fixing of guidance value for all property and ensure that it reflected the market value. The case was fought in the High Court over an eight-year period.

As Revenue Minister, Mr. Somashekar pushed forward the amendments to the Stamp Act to ensure that there was an end to large-scale violations in the registration of property, particularly in Bangalore.

Thanks to the amendments to Section 45 (a) and (b) of the Karnataka Stamp Act, the under-valuation of stamps, which was 67 per cent in 1997-98, had now slumped to around 2 per cent, which in real terms translated into quick additional revenue of around Rs. 500 crore to the Government. This, along with the real estate boom in the recent years, had ensured that the Government netted huge revenue from stamps and registrations.

Sources in the Government said that the revenue to the State from stamps and registrations, which was around Rs. 660 crore in 1997-98, is expected to cross Rs. 3,000 crore this financial year. Apart from the real estate boom and the increase in the market value of property, it is the amendments to the Stamp Act that ensured that guidance value fixed by the authorities concerned was in consonance with the prevailing market value. This directly ensured that there was no under-valuation of stamps and registrations.

Mr. Somashekar told The Hindu that there were several features incorporated as part of the amendments to the Stamp Act and these had now proved to be a boon to the Government. It included a notable clause that guidance value had to be regularly revised and that it could be finalised and notified at the local level. Prior to the amendments, it took years for the Government to approve the guidance value fixed by the local authorities, which resulted in a loss to the exchequer owing to the gap between the guidance value and the market value.

This resulted in the sub-registrars classifying a large number of registered documents as undervalued and referring them to the district registrars, who took years to resolve the dispute and collect the penalties.

Soon after introducing the amendments, the then Government, headed by J.H. Patel, announced a scheme, in an effort, to quash all the cases pertaining to under-valuation. Property owners were given a one-time discount of 30 per cent in the rates fixed by the district registrars if they were keen on giving up their respective litigations pertaining to under-valuation. This resulted in the settlement of over 40,000 cases of under-valuation and revenue of Rs. 100 crore to the Exchequer.

The sources said a committee of experts would fix the guidance value in all major towns and cities henceforth. In the case of Bangalore, it would be streamlined.