The guideline value for a property in India is the estimated value of a property as per the records of the government. In an ideal situation, the property guideline value reflects the property’s true market value. For instance, there is land for sale in Mannivakkam, and you are interested in buying the land. In this scenario, you can check out the property value of the land from the government records. Although in many cases, the property guideline value is lower than the property’s market value, in some cases, the property value is higher than the market value.
In many cases, the state government authorises the property guideline value for all the properties within the state. Well-established properties have street-based guideline values. And for the residential area that is not formed into streets, the guideline value for the property is fixed upon the number of properties.
Importance of Property Guideline Value
The property guideline value has an important role in purchasing a particular property and its registration. So if you want to know about the land mannivakkam square feet rate, then the government records with the property guideline value might be helpful. The property guideline value helps the registration officer know and detect a property’s undervaluation. In cases when the property value is exceptionally higher than the market value, these cases can be brought to the notice of the relevant deputy inspector general of registration, district registrar and inspector general of registrations for the correction of any abnormality. The registration charges are typically based on the property guideline value. The property guideline value has to be periodically revised to be in sync with the market value.
Difference between the market value and the guideline values for properties
A property guideline value is a price that is fixed by the government and below which the sale of the property cannot take place. However, when you look for TVH plots mannivakkam, you may feel that there is a difference between the market value and the guideline values for the properties. There are two effects of these cases:
Encouragement of transferring black money to the real estate industry:
When the property guideline value is less than the market value, then it tends to do a number of property deals where only the property guideline value is mentioned in the sales document, and the remaining balance is done in cash. In most cases, the market value of a property is higher than the property value, and the difference between the market value and the guideline value becomes the cash component. This cash component in this kind of deal is considered a source of black money.
Loss of revenue of the state government:
Based on the guidelines of the property guideline value, the charges to register the property stamp duty of a property is calculated. In cases when the property land for sale in Mannivakkam has a lesser property guideline value than the market value, then there will be a loss of revenue to the respective state government.
Facts to Know About Guideline Value of Land
- The guideline value of a property is the minimum amount of a property to be registered in a particular locality. Thus, the property should be sold at an amount lesser than the market value. This gives a minimum selling price for the seller.
- Suppose an individual buys a property for a price that is lower than the state government. In that case, the person has to register the property at the market value set by the government and pay taxes on the market value of the locality.
- Suppose a buyer purchased a property at a higher value than the market value decided by the state government. In that case, the individual has to register the property at the actual value and pay taxes at the purchase price.
- The terms of guideline value of property vary from state to state. So, the terms for land for sale in Mannivakkam has different guideline value than the land in Rajasthan.
- The guideline value for a property is applicable to all sorts of land in a locality. The property could be an apartment in a housing complex, agricultural land, a plotted development, an independent villa and so on.
- The guideline value of a property depends on the developmental stages of the property. A property located in a well-developed locality will have a higher guideline value as compared to a property located in a less developed locality.
- The market value of a property is decided by the state government based on various factors. A buyer cannot compel the property owner to sell the property at the guideline value. However, a seller has the right to sell the property at the price he commands.
- The guideline value of a property is important for the state government as it will dictate the stamp paper duty, property taxes and registration charges on the property.
Consequences of Income Tax on Buying a Property at Below Stamp Value
When a property is sold at a price that is lower than the stamp duty value, the seller and the buyer both incur the loss. The buyer faces loss because of section 56 (2)(vii)(b) of the income tax act. Under this provision, if the difference between the stamp value and purchase value exceeds the amount of INR 50,000, then it is considered income under the heading “income from other sources”. It is applicable only when the buyer receives the property as a capital asset and not as stock in trade.
To Conclude,
The guidance value of a property is often one of the most overlooked aspects of real estate. With proper knowledge of it, you can avoid the chances of getting scammed while purchasing your dream house.
