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Karnataka to hike guidance value by 15%

A minister said the government wants to leverage the growth in the real estate sector by hiking guidance value and giving a push to online registration by extending the implementation of the web-based application Kaveri 2.0 to cities like Bengaluru.

The Congress government is mulling over increasing the guidance value of properties by 15% in its quest to ramp up revenues to fund its poll guarantee scheme.

A minister said the government wants to leverage the growth in the real estate sector by hiking guidance value and giving a push to online registration by extending the implementation of the web-based application Kaveri 2.0 to cities like Bengaluru. The guidance value has not been increased since 2019 owing to Covid-19, while it is supposed to be revised upwards by 15% every year.

Officials said the BJP government had approved the stamps and registration department’s proposal to hike the guidance value, and the department may consider submitting the proposal afresh to the new government, if required.

However, sources said CM Siddaramaiah is in favour of hiking the guidance value since it would help the government ramp up revenue by at least 20% while not increasing the market value of properties much. Guidance value is the minimum price at which a property transaction is registered.

While the government fixes the value depending on the locality where the property is situated, it is significant since stamp duty and registration fees are calculated based on this price.

For instance, a buyer has to pay 5.6% stamp duty, including cess and surcharge, if the price of the property is above Rs 45 lakh. The duty is fixed at 3% if the property value is in the range of Rs 20 lakh and Rs 25 lakh, and it is 2% if the price is less than Rs 20 lakh.

The buyer has to pay 1% registration fee over and above the stamp duty, irrespective of the property price. Thus, the hike in the guidance value is expected to result in a proportionate increase in revenue to the government exchequer. Also, the government is all set to launch web-based application Kaveri 2.0 in the city’s 45 sub-registrar offices on Monday (May 29) and roll out full-fledged online registration of properties and other documents.

While the adoption of technology is expected to bring in much-needed transparency and speed in the process, it is also expected to ensure more revenue by minimizing corruption-prone human intervention.

The government has already launched Kaveri 2.0 on a pilot basis in other districts and implementation started in a phased manner from Kalaburagi in February. It had kept Bengaluru, where the number of registrations is the highest, for the final phase to ensure that tech glitches, if any, are rectified and the registration process is without any disruption.

“While the real estate sector is on a growth trajectory, the bullish trend can be leveraged to ensure further growth. We are exploring all possible means to increase revenue collection,” said Mamatha BR, inspector-general of registration and commissioner of stamps.

“The hike in guidance value will not affect the market price of properties since most of the properties are being registered on guidance value, which is way below since it has not been revised for four years. So the hike is both in the interest of government revenue as well as consumers,” said a minister. He gave the instance of MG Road in Bengaluru, where guidance value of a property is Rs 1.95 lakh per square metre but sold for at least Rs 2.5 lakh.

So, 15% hike in guidance value will only result in a corresponding increase in government spending, not alter market price of the property. Bhaskar Nagendrappa, president of Credai-Bengaluru, however, begged to differ.

“The increase in guidance value will definitely push up property prices, and the sector will slow down. In fact, the 10% rebate that was given last year has proven that lowering the rate will increase sales and thereby increase revenue,” he said.


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