Last week Finance Minister R. Ashoka said, that the government is considering revising the guidance value by December. Any reduction will be made in overall Karnataka, with the exception of industrial areas and areas along the highways.
Discussions in the state government about the decline in the guidance values have encouraged developers and potential home buyers. This will spur the real estate sector showing signs of improvement after the second wave of Covid-19.
A lower guidance value is expected to boost the number of property registrations, which in turn will increase government revenue. About 2.1 lakh documents were registered in August, which generated revenue of Rs 1,142 crore, up from Rs 969 crore (1.7 lakh documents) in 2020 and Rs 911 crore in 2019.
What is Guidance Value?
Guidance value is the property’s minimum sale price. The government creates this depending on the area and the type of building. Downward revisions will lead to lower property prices. According to the rules, the government must review the costs every year. In January 2019, the government announced an increment in the range of 5 to 24 percent.
Demands to lower the rates
K.P. Mohanraj, Inspector General of Registration and Commissioner of Stamps, said, the guidance value could not be revised in 2020 due to the pandemic. Since the government wants to accept this year, we started the process. Demands for lower rates have long been heard, which in some areas is very high and leads to overpricing of real estate. For example, the guidance value of a property on MG Road is over Rs 1.9 lakh per square metre. On Lavelle Road it is about Rs 2 lakhs per square metre. Some real estate representatives said that due to the recession associated with Covid, some properties were undervalued and sold.
Government should also provide exemption in stamp duty
MS Shankar, the general secretary of the Forum for People’s Collective Efforts, said a decrease in the guidance value will have an impact on the property tax. The news added to the positive sentiment, especially in the wake of the recent property tax euro caused by BBMP’s erroneous zoning. The government should also consider reducing the stamp duty on property registrations across all price ranges.
Suresh Hari, chairman of CREDAI-Bangalore, said, while we welcome the government’s plans to lower the guidance value, we hope the government also takes into account the underlying realities before concluding the final rates. He added that real estate sales have reached 30 percent from the level before covid.