Guidance value for Karnataka to witness a hike

In a move to scare up revenue from all the departments, the Karnataka government has proposed an upward revision of the guidance value of real estate properties to accumulate a sum of 840 crore. The hike will be done by increasing the stamp duty and registration fee charged for listing properties in the city.

The proposed hike is likely to mobilize the resources and aid the government to implement its Rs 1 per kg rice, that would require a sum of Rs 4500 crore. According to government officials, the guidance value has been revised on an average of 30% in 25 districts.

Revised guidance value

As an attempt to maintain stability in the realty sector of the state, the stamp duty has been reduced to 5% from 6%, by the government. According to market reports, the target for revenue collection by the government has been set at Rs 6100 crore during the year 2013-14, via registration and stamps.

Government officials further confirm that more than 226 crore is expected to garner from the remaining districts, since revenue from registration and stamps is one of the biggest sources of income for the nation.

Hike in guidance value will leave its impact on five districts under BBMP limits namely- Rajajinagar, Jayanagar, Basavanagudi, Gandhinagar and Shivajinagar. Around 42 sub-registrar offices are present under these districts. However, beefing up of the guidance value is not consistent and is unaltered in Magadi Road, Kengeri, Sunkadakatte and certain areas of Bangalore West.

Impact on real estate

The revised guidance value is likely to leave its mark on the realty market and trigger the revenue of the State significantly in the long run. The revise structure will aid the government to generate more revenue via stamp and registration fees from individual property owners. In addition to it, it will jack up the compensation which property owners are entitled.

Government officials further confirm that the revised guidance value is likely to taper the registration value and market rate of the properties. The realty sector in Karnataka has already been racked up with economic slowdown, poor output of the software sector and currency crisis. The revised guidance value will inevitably put more financial stress on the property buyers, thereby creating an adverse effect on the sale of the residential plots.

According to potential sellers and real estate developers, hike in guidance value is a matter of great consideration while selling the property. Hike in the guidance value is likely to discourage the sellers to a great extent. To add to it, the big developers and builders are generally at the helm for the hike in market rates, henceforth the small builders suffer huge losses. Hence, with the surge in guidance value, the real estate market of the city may take a dip significantly.