The Hindu : Front Page : Government steps in to check undervaluation of property

Online edition of India's National Newspaper
Tuesday, Feb 24, 2009
ePaper | Mobile/PDA Version

Front Page

Front Page

Government steps in to check undervaluation of property

S. Rajendran

Focus on mobilising additional resources through stamp duty and registration

Bangalore: Close on the heels of announcing a big discount in stamp duty for registration of immovable assets in the recent budget, the State Government has stepped in to check undervaluation of property, particularly while leasing out property. Seventy per cent of the registrations of immovable assets are recorded in Bangalore and adjoining areas, and the focus of the Government is now on the metropolitan city to tap additional resources in stamp duty and registrations.

In a quick move to check undervaluation, the Government has directed the constitution of a vigilance wing at the earliest to prevent unethical practices in property sale and lease agreements. Such practices are stated to have resulted in a major loss of revenue to the State Exchequer. It is estimated that the new measure should net the Government an additional Rs. 400 crore a year.

Chief Minister B.S. Yeddyurappa, acting on information provided to him on the ways to plug loopholes in the resource mobilisation system, has directed the authorities to immediately appoint a high-ranking official to prevent what has been termed as unethical ways adopted by some property developers, particularly in Bangalore, to hoodwink the Government. The Inspector-General of Stamps and Registration, K.R. Niranjan, is also looking into the various loopholes in the registration process.

Sources in the Government told The Hindu that the process of appointing an officer of the rank of Deputy Inspector-General of Stamps and Registration (Vigilance) has been set in motion and he will be assisted by a team of officials. The vigilance squad will primarily work to detect undervaluation of property on lease. It will also look into undervaluation in registration, though these cases may not be in big numbers given that registrations have to be strictly in accordance with the guidance value fixed by the Government.

Mr. Yeddyurappa, in the State Budget, reduced the stamp duty on transactions in immovable property from 7.5 per cent to 6 per cent. This will also have a cascading effect on the surcharge on stamp duty and the infrastructure duty on stamp duty. When registering a property, the reduction in effect will be around Rs. 1,700 for a property valued at Rs. 1 lakh.

Fall in revenue

Apart from giving a boost to transactions in immoveable property which have hit a low following the slowdown, the Department of Stamps and Registration will be able to mobilise more resources in the coming financial year than in the current fiscal.

While 13 lakh property documents were registered in the State in 2007-08, resulting in a gross revenue of Rs. 3,630 crore from stamp duty, surcharge and infrastructure duty, as on February 15, 2009, the total number of documents registered was only around nine lakh, and the net revenue to the Government around Rs. 2,900 crore. The Government has set a target of Rs. 4,100 crore for the Department of Stamps and Registration for the current financial year.

The changes in the stamp duty rate is also in accordance with the National Habitat Policy. Karnataka, like other States, has been directed to reduce stamp duty on registration of immoveable property to 5 per cent by 2011. This will help the State in obtaining a range of benefits under the JNNURM.

Printer friendly page
Send this article to Friends by E-Mail

Front Page