Valuers’ Association write to CM Punjab on Low Collector Rates in the state causing huge loss to the exchequer and extra burden on the end user i.e. a common man.
-Valuers consider this a major reason behind Black Money in the Real Estate Sector.
Ludhiana: 25th May,2022
Er. Kapil Dev General Secretary of Valuers Association (Regd.) in a press release has informed that they have written to CM Punjab about Low Collector Rates in Punjab causing huge loss to the exchequer and extra burden on the end user i.e. a common man, which this group of valuers consider a major reason behind Black Money in the Real Estate Sector.
The association has taken reference to the provisions contained in the Punjab Stamp (Dealing of Undervalued Instruments) Rules, 1983 which have been issued under the provisions of the Indian Stamp Act, 1899. The Section 3-A of the aforesaid Rules lays down the procedure to be adopted for fixation of minimum value of land/property for the purpose of enabling the Registering Officers to levy stamp duty on instruments of transfer of any property. The rates so fixed, are revised by the Collector, once a year as far as possible in the month of March and to be effective from first April of each year or after one month of its fixation. The matter referred to CM is as under:
1.That the Collector Rates being fixed by the various Collectors in the State of Punjab do not reflect the realistic market value of the property as the Collector Rates so fixed by the District Collectors are much less than the market value of the properties in the concerned areas. The practice of fixing the collector rates is incomplete & shabby as the technically qualified and most competent persons i.e. Government Approved Valuers by the Ministry of Finance are not included as members of the committee by the District Collector.
2.That the actual rates of residential as well as commercial freehold properties within municipal limits of Ludhiana, Jalandhar, Amritsar and all other developed areas of Punjab (except some localities developed by IREO/OMAXE/JANPATH etc.) are almost 2.5 to 5 times (or even much more) the prevailing District Collector Rates. For instance, the petitioners may submit that rate fixed by Greater Ludhiana Area Development Authority (GLADA) for allotment of residential plots in Dugri Phase-II & III, Byepass, Ludhiana, and in Sector-38, Samrala Road, Ludhiana, GLADA Estate backside Keys Hotel is Rs 29000/- per Sq yards. Further, the bid for auction of a large number of plots in the developing block of Phase-III at Dugri has crossed Rs 35000/- per square yard many times. However, the collector rate of Dugri Phase-I, II & III as on date is just Rs 17595/- even in well developed areas of Dugri. Further, the auction of a large number of residential and commercial properties by Ludhiana Improvement Trust has crossed circle rates by 3 to10 times the collector rates in the last 2-3 financial years. It is pertinent to submit here that the bid price is being fixed at much more than collector rates as fixed by the District Collector in Ludhiana. Similar is the condition of other localities of Punjab. For more details, data of successful auction of hundreds of plots by PUDA, Improvement Trusts, PSIEC etc. may be checked.
3.That from a survey of the market and perusal of the various electronic and print media reports & auction by Development Authorities in Punjab from time to time, it is clear that a lot of black money is being invested into the real estate sector, due to which, the Government of Punjab is losing a lot of revenue in the shape of stamp duty. Further, despite submitting suggestions many times, the collector rates have not been increased to the realistic value by the District Collectors of Ludhiana, Jalandhar & Bathinda.
4.That at most of the locations, the collector rates are just 10-30% of actual prevailing market rates & it is the most easiest and safe way to absorb black money by corrupt Government officials/politicians as well as investors which has given unnecessary rise to market rates of properties in Punjab. The Punjab Government is generating income by increasing the stamp duty gradually which is now around 8% + overheads as on date. A common man, who is the actual end user, is the most suffering party as one takes home loan from the Bank at prevailing market rates to purchase or make the house. Thus, due to high Stamp duty, one has to pay much more stamp duty as compared to the investors and developers.
5.That the collector rates in Chandigarh have been fixed at very realistic value, however the stamp duty has been fixed at 6%. Since Punjab has much more geographical area and much more potential as compare to Chandigarh, the Government of Punjab should also adopt such provisions and collector rates may please be increased to realistic value i.e. near to market rates and stamp duty should be decreased to 3-5% to encourage the buyers to do maximum transaction in white money. With increase in collector rates to realistic value and decrease in stamp duty would definitely increase the revenue in terms of stamp duty collection against transfer of ownership rights of land.
6.That the State Government has fixed the value of building based upon collector rates, which is an arbitrary method as cost of construction doesn’t increase or decrease based on collector rates in the same city or even state. Such provision of calculation of value of similar types of buildings based upon collector rates is also causing loss to the exchequer in terms of assessment of Stamp duty for buildings. Thus, the value of building is required to be fixed based upon physical inspection of property and Valuers Approved u/s 34AB of Wealth Tax Act, 1957 (approved by Ministry of Finance) are competent and only eligible persons to assess the value.
7.That in order to fix the realistic value of land of various localities in the beginning of every financial year, the Fellow members of Valuers Association, who are registered valuers by Ministry of Finance are always ready to provide their services free of cost, if they are included as members of committee, if formulated by Punjab Govt. through the district collector. It is pertinent to mention here that valuers of Category-1 approved u/s 34AB of Wealth Tax Act (by Ministry of Finance) have vast experience in the field of Valuation and only competent persons to do valuation for Immovable properties as enshrined under Government of India (allocation of Business) Rules, 1961. Thus the procedure as adopted by the Government of Punjab every year to fix the collector rates of land is incomplete and promotes black money in the real estate sector and causing huge loss to the exchequer in terms of less stamp duty collection.
In order to increase the revenue of Stamp duty collection and to give set back and to discourage the corrupt Public Servants/ bureaucrats /politicians/financers/developers who invest in real estate sector in Punjab & inflate the land prices as per their whims & fences from time to time, due to which a common man has no other option but to buy plot at higher value than genuine prices, it is humbly submitted that the collector rates of land may please be increased to realistic value. Further the value of buildings may please be considered after taking valuation reports from Government Approved Valuers of the Ministry of Finance. As submitted above, the fellow members of Valuers Associations are ready to provide the services free of cost in fixing the collector rates of land, if included as members of committee by the Government of Punjab.
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Er. Kapil Dev General Secretary,Valuers Association (Regd.) may be contacted on Mobile: 9872007872 or email at Arora Engineers <aroraengineers@gmail.com>
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