RE­VIEW­ING CIR­CLE RATES CAN CURB BLACK MONEY USE

Hindustan Times (Chandigarh) - Estates - - FRONT PAGE - –VAN­DANA RAM­NANI

Cir­cle rates or mar­ket rates (re­ferred to as guide­line value in some states, as jantri rates in Gu­jarat and card rates in Andhra Pradesh) should be re­vised ev­ery year. But un­for­tu­nately, some states do that only once in two years. In Tamil Nadu, the last re­vi­sion took place way back in 2012.

Cir­cle rates should be at par with mar­ket val­ues of prop­er­ties. Only then will the full value of sale con­sid­er­a­tion get re­flected in the sale deed and en­sure that the full amount of stamp duty is paid. In most mar­kets to­day, cir­cle rates are not at par with mar­ket val­ues, re­sult­ing in eva­sion of stamp du­ties and thereby gen­er­a­tion of black money, ex­plains Shyam Sun­der, a Chen­nai-based ad­vo­cate and au­thor of Prop­erty Reg­is­tra­tion, Land Records and Build­ing Ap­proval Pro­ce­dures fol­lowed in var­i­ous states in In­dia.

To plug this loop­hole, the reg­is­tra­tion de­part­ment should con­stantly mon­i­tor the value of prop­er­ties in all ar­eas. A ded­i­cated team should be set up in each state to mon­i­tor th­ese val­ues for de­ter­mi­na­tion of real mar­ket value of the prop­erty. They should en­sure that the av­er­age of the last two high­est de­clared val­ues are taken into ac­count to de­ter­mine the ‘real’ mar­ket price, Sun­der says. De­ploy­ment of black money in prop­er­ties can be curbed by re­duc­ing cap­i­tal gains tax.

At present, there are only two slabs to de­ter­mine cap­i­tal gain tax – long-term as­set and short-term as­set. The for­mer is any as­set held for more than 36 months for which 20% is paid as in­come tax and the lat­ter is any as­set held for less than 36 months for which in­come tax is cal­cu­lated ba­sis the in­come of the as­sessee.

It is sug­gested that one more slab be in­tro­duced, wherein the in­come tax rates can be brought down to 10% for long-term prop­er­ties held for over 10 years and 15% tax for long-term prop­er­ties held for three years and up to 10 years. This will en­sure that full value of sale con­sid­er­a­tion will be de­clared in the sale deed, says Sun­der.

The present rates of cap­i­tal gains tax are high, re­sult­ing in non-dec­la­ra­tion of full sale con­sid­er­a­tion.

Sun­der also sug­gests that ex­emp­tion norms for cap­i­tal gains should be re­laxed. The ex­emp­tions from cap­i­tal gains are al­lowed on the sale and pur­chase of as­sets.

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