karnataka: Property market: Transaction values to go up as Karnataka sets out to revise guidance value

Karnataka is gearing up to revise the guidance value of properties to align it with market rates, a move that could see a spike in transaction value of properties in Bengaluru and the rest of Karnataka.

Revenue Minister Krishna Byre Gowda chaired a meeting with stamps and registration officials on the subject. The guidance value or circle rates, as it is called in some states, was last changed on January 1, 2019, and the government did not visit the subject in the years gripped by the Covid-19 pandemic.

Gowda’s meeting is in line with Chief Minister Siddaramaiah’s announcement in his July budget that there have been many changes in immovable properties in recent years that have led to anomalies in the guidance value of properties. The government would revise the guidance value to rectify the anomalies, Siddaramaiah added, while fixing the target for the Stamps and Registration department at Rs 25,000 crore for the year 2023-24.

The stamps & registration department has collected Rs 6522 crore as of August 21 this fiscal year compared to Rs 6142 crore during the same period last year. The Finance department has factored in an increase in guidance value while fixing the revenue target this year.
Karnataka introduced the guidance value system in the 1990s to plug leaks in stamp duties through under reporting of the value of transactions.The central valuation committee (CVC), tasked with estimating, publishing, and revising market value guidelines of properties will meet this week to take the exercise ahead.The revenue department’s move was welcomed by Credai, a body of real estate developers. “In Bengaluru, the guidance value of farmlands at many places don’t reflect their true market value. At the same time, built-up spaces in many places carry a higher guidance value than their real market value, leading to an anomaly,” Credai Bangalore chairman Kishore Jain said, while urging the authorities to approach the exercise in a scientific way with inputs from all stakeholders.Inspector General of Registration BR Mamatha said there has been a wide gap between land prices and guidance value in most cases, masking the true vibrancy of Karnataka’s property market. Her department will try to bring prices at par with market value.

The government is tapping all possible revenue sources as the Congress party’s five big-ticket election promises are estimated to cost about Rs 52,000 crore annually.