The last revision of guidance value was carried out in 2018, which came into force from January 1, 2019
The State government is all set to revise the guidance value of properties shortly. The Department of Stamps and Registration has already started reassessing property values and will soon come out with a draft of the new guidance values.
Revenue Minister Krishna Byre Gowda said the last revision of guidance value was carried out in 2018, which came into force from January 1, 2019, which meant guidance value hadn’t been revised for four-and-a-half years.
The guidance value had not been revised owing to the hit the real estate sector took during the pandemic. The previous BJP government even gave a 10% rebate in guidance value during two three-month intervals in 2022.
“This is a backlog and we need to bring the guidance value on a par with market value as far as possible to avoid circulation of black money. If the guidance value was higher than the market value, it would even be reduced,” the Minister said. He said the final decision would be taken soon and refused to elaborate on the possible quantum of revision.
The market value of properties had risen up to 50% in the intervening period since the last revision of guidance value, sources in the Department of Stamps and Registration said. The revision of guidance value will bridge this gap as far as possible, sources said, indicating the possible quantum of revision.
Opposition from the real estate sector
The decision to revise guidance value has been met with opposition from the real estate sector. Suresh Hari, of CREDAI - Bengaluru, said the market that had taken a big hit during the pandemic had recovered to pre-pandemic levels over the last three quarters and a guidance value revision would again hit the market. “Last year, the State government gave a 10% rebate in guidance value for two intervals and saw the number of transactions and hence revenue mop up increase significantly. This should be the guiding principle for the new government and we hope there is no revision,” he said.
However, given the bouyancy in the market over the last fiscal, indicated by overshooting of revenue targets set in the budget and increase in both the number of transactions and the market value of properties, the government has decided to revise guidance value, sources said.
“The pandemic has spurred investment in real estate, maybe because of savings during pandemic years due to low spending. Amendments to the Karnataka Land Reforms Act, 1961, in 2020 removing restrictions on who can own agricultural land has also spurred investments. The share of property transactions and even revenue of all districts put together outside Bengaluru was around 30% before the amendment and it is now almost half of the total,” a senior officer said.
Resource mobilisation
The State government is also keen on resource mobilisation to implement its five “guarantee schemes” and the revision of guidance value, a long-pending proposal, which is expected to fetch more revenue for the government will be carried out, sources said.
The revenue target set for 2022-23 – ₹15,000 crore – was breached and a whopping ₹17,800 crore was collected, indicating the buoyancy in the real estate sector. This prompted former Chief Minister Basavaraj Bommai to set a higher target of ₹19,000 crore for 2023-24, which is all set to be increased by a large measure in the new budget Chief Minister Siddaramaiah is all set to present on July 7. Despite the Assembly elections and the adoption of a new software Kaveri 2.0, revenue collection has shot up by over ₹200 crore during the April-June quarter.
Though there was also a proposal to hike stamp duty, the CM, who chaired a pre-budget review meeting of the Department on Monday, is reportedly not keen on the same.
