The terminology 'under- valuation' is frequently used in
matters of transfer of property, which has a direct bearing on payment of stamp
duty and registration charges payable to Government. Before turning upon the subject
'under-valuation', it is necessary to understand the constitutional provisions
relating to stamp duty. Articles 246, 265, 268, 269(1) of the Constitution of
India are relevant here. Article 246 refers to the powers of Parliament and
State Legislature to make laws. The Constitution of India has Union list, State
list, and Concurrent list. The Parliament has powers to make laws in respect of
matters mentioned in the union list and state legislatures have powers to make
laws in respect of matters mentioned in the state list and both have powers to
make laws in respects of matters mentioned in the concurrent list.
For day-to-day functioning and to meet administrative
expenses and also for undertaking developmental works, every Government whether
in the Centre or State requires revenue which is earned from different sources.
Levy of tax is one such source of income to the Government. Article 265 makes
it very clear that no tax shall be levied or collected except under an
authority of law.
Stamp duty registration charges are the major sources of
revenue to the State Governments. In Karnataka, the department of registration
and stamp duty is ranked among the top five revenue earning departments of the
State.
The stamp duty and registration charges are payable on ad
valorem basis, that is based on the value of property. No maximum limit is
prescribed in respect of stamp duty and registration charges payable on
transfer of property. The stamp duty and registration charges go up with the
increase in the value of sale consideration paid for the property i.e., higher
the sale consideration, greater the stamp duty and registration charges. These
charges are normally borne by the purchaser of the property unless there is a
contract between the parties to the contrary effect. Apart from payment of sale
consideration, stamp duty and registration charges, the purchaser has to incur
expenditure to get revenue records mutated in his/her name and for transfer of
power and water connections to his/her name.
To save some money from out of this expenditure, parties
to a sale transaction by mutual consent mention the value of the property in
the conveyance deed at a much lower figure than its actual market value and
thereby pay less stamp duty and registration charges while at the same time,
the purchaser makes payment of sale consideration as agreed upon to the vendor.
This process of declaring the value of a property in the conveyance deed at a
figure lesser than the actual sale consideration agreed upon for purposes of registration
is generally known as under-valuation of the property. This modus operandi has
two adverse effects on the society. Firstly, there is loss of revenue to the
Government and secondly, circulation of unaccounted money in the market goes
up. The Karnataka Stamp Act 1957 has certain sections dealing with
under-valuation of property. Section 45-A inserted in the Karnataka Stamp Act
1957, during 1975 and 45-B inserted during 1991 deal with the subject. Section
45-A deals with the procedure to be adopted where the properties are
undervalued in a sale transaction.
The parties producing documents for registration have to
file the market value of property calculated in the prescribed form No.l. If
registering officer has reasons to believe that the market value of the
property shown in the document produced for registration is not the actual
value of the property in the locality, he may arrive at the market value of
such property and inform the parties to pay the stamp duty and registration
charges according to the market value arrived at by him. For arriving at the
market value, the registering officer will use the guidelines value published
by the committee constituted for estimation of market value under Sec.45-B. The
values published by the committee are the guidelines value for registering
offices to determine the market value. They are the average value of the
property in a particular locality. If the sale consideration of a property
shown in the sale deed is lower than
the guidelines value pre- scribed for that area, then the stamp duty &
registration charges are payable on the basis of the guide- lines value. If the
market value of this property is more than the guidelines value, the stamp duty
payable is as per the market value.
For More..........:
No comments:
Post a Comment