The Karnataka government has decided to increase guidance value for properties by 10% to 30% to mop up revenue in the next fiscal and fix the huge shortfall in revenue collection from the stamps and registration department, reports Manu Aiyappa. The government set a target of Rs 8,200 crore for the stamps and registration department for 2015-16, but it suffered a shortfall of about Rs 2,000 crore.
Revenue shortfall pushes govt to hike guidance value
After proposing a special cess on private layout developers, the state government has now decided to increase guidance value for properties by 10% to 30% to mop up revenue in the next fiscal and fix the huge shortfall of revenue collection from the stamps and registration department.
Guidance value is the indicative market value of a property, and the government registers a sale only at that value or higher.
The state revenue department proposed an increase in guidance value of properties from April 1 to ensure it meets the target for this fiscal and give a big boost to the state exchequer.
According to officials, the government set a target of Rs 8,200 crore for the stamps and registration department for 2015-16 but it suffered a shortfall of about Rs 2,000 crore. “The department hopes people will rush to buy or register properties ahead of the hike in guidance value and this will help meeting the current year’s target,” officials added.
NV Prasad, inspector-general of registration and commissioner of stamps, however, said the revision of guidance value has nothing to do with revenue collection target. “The revision of guidance value is an annual affair since 2014 and done usually in November. The government postponed it last year fol lowing an appeal from the realty sector. This time, we have decided to revise it a little early,” he added.
The decision comes in the wake of a flat real estate market, and reports that property registrations have hit a record low and thou sands of flats and sites developed by private developers are unsold in and around Bengaluru.
Apart from increasing land registration fee, the government has already proposed a 2% cess on the market value of fresh layouts to implement projects for the Ring Road, drinking water, rapid transit and slum development (0.5% each). With the hike in guidance value and imposition of cess on private layout developers, realty experts said property prices could shoot up by at least 5% to 15%.
Experts also predict a slump in land dealings, especially residential properties, after April as it would mostly affect buyers and real estate developers. “People may get discouraged by the extra registration fee. Moreover, many aspiring to buy a plot or flat may put off their plans and wait for things to change for the better,” they said.