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Booked your flat? Pay more now

New Norms Push Up Registration, Stamp Duty Charges

Bangalore: Feeling happy that you have already booked your flat and need not worry about price rise? Here is a shocker! Registering property will be dearer from Friday when the new guidance values announced by the state come into effect.

Since guidance values are the basis for property registration, both registration fee and stamp duty will go up depending on the area.

According to preliminary estimates, the new guidelines are expected to push up the property registration cost by 50% on an average.

With transaction cost in the form of registration accounting for 10% of the property value, it could be an additional burden of a few more lakhs of rupees for property buyers.

“The cash component could go up in commercial property deals because of higher stamp duty,” explains a source at a real estate agency.

Though the cost of the property will go up because of the new norms, it will not have any impact on the cash component in deals. The properties were registered at a price much below the commercial rate in the past though the buyer always paid according to the market value, the government will earn higher revenue but it will not have any impact on the purchase price.

Echoing this reasoning, some say that the move will actually narrow the huge gap between the market value and government value of properties.

The hike is surprising because it will make properties unaffordable for many in prime location. There is also speculation that many buyers might resort to holding on to their property under GPA (general power of attorney) instead of registration to avoid registration cost.

New property guidance norms from today

Bangalore: New guidance values for property registration will come into effect from Friday. The increase follows the recommendations of the Central Valuation Committee (CVC), headed by the inspector general of registration and commissioner of stamps (IGRCS), set up three years ago, making it an annual exercise.

The government is expected to mop up Rs. 500-600 crore in additional revenue through this exercise.

While the increase in some of the BCC areas is to the tune of 40 to 50%, in some of the peripheral areas including suburbs, the increase has been almost 100%, owing to the fast pace of development. Despite the increase, the guidance values are, however, less than the market value in most of the places.

“ In the last few years, there has been a lot of infrastructure development. Areas around the Outer Ring Road like Kengeri, Kadugondanahaill, Peenya have appreciated a lot and market is booming. But there was always a gap between the market rate and guidance value, so the government was losing out on revenue. This annual exercise is intended to ensure that government gets the correct share,” revenue department source said.

Source also said the exercise is quite democratic. The draft values were finalized and announced two months ago. “ We had called for objections and various people, like citizens, developers, construction industry and other organizations gave us feedback. We took all their suggestion before announcing the new values,” sources said.

HOW MUCH?

New guidance value of some areas is as follows

  • Rajajinagar - Rs 1,750/ sq ft
  • Indiranagar - Rs 3,100/ sq ft

  • KG Road - Rs 4,900/ sq ft

  • MG Road - Rs 4,200 - 5,400/sq ft

  • Sadashivanagar - Rs 3000/ sq ft

  • RT Nagar - Rs 2,000/ sq ft

  • Basavangudi - Rs 2,400/ sq ft
  • A BIT OF EDUCATION AND HUMOUR HERE

    What are guidance values?

    Guidance or guidelines values are decided by department of stamps of registration for every area/city/town in the state, and is different from the market value (It is also usually lower). This is the basis for calculation of registration fee and stamp duty, irrespective of how much is paid for a transaction.

    Caught in the web!

    The department of stamps and registration, in its bid to keep pace with real estate market in typing to fix its guidance values, has quite forgotten to keep the citizens informed on this. The website bears guidance values from 2002, though they have been revised in between. The department head continues to be D Satyamurty, who was transferred more than a year ago. And the department has no qualms in accepting its tardiness: the site was last update on January 4, 2003, and the fact is mentioned quite prominently!

     
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