KNOWLEDGE BANK FROM B KANAGA SABAPATHY
LET KNOWLEDGE SPREAD
Message from B. K. sir 15/04.2023
Question :
What are the 10 points to be remembered by a registered valuer who intends to do valuation for capital gains?
My opinion :
1. Before accepting the valuation assignment, the valuer must know clearly for what section of Income tax he is required to do valuation.
2. The date of sale is the criteria to proceed with the valuation.
3. If it is sold before 31.03.2017, the old cost indices are to be used. The cut off date is 01.04.1981.
4. If it is sold after 01.04.2017, the new cost indices are to be used and the cut off date is 01.04.2001.
5. If it is sold after 01.04.2020, it should be remembered that the FMV as arrived at should not exceed the stamp duty value.
6. The assessee has to pay more capital gains, when the FMV is less.
7. The FMV will be more where the depreciated value of the building is less.
8. To calculate the depreciated value of the building, it is preferable to apply constant percentage method instead of straight line method. When the age is below 14 years, both methods will give you same result.
9. The income tax department has published 2 books on Guidelines on valuation in the year 1999 & 2009.
i) Guidelines for valuation of immovable properties – S.K. Dhawan
ii) Guidelines for valuation of immovable properties – Directorate of Income-Tax
The registered valuer must be thorough with the guidelines given in the book in order to prepare a fool proof valuation report.
10. A report on capital gain is to be self explanatory and the valuer must be in a position to defend his report when questioned.
With best wishes,
B. KANAGA SABAPATHY
bkvaluer@gmail.com
www.bkanagasabapathy.com
About the Author:-
- Mr. B. Kanaga Sabapathy born in 1951, is a Civil Engineer who belongs to the 1972 batch of Regional Engineering College, Tiruchirappalli in Tamilnadu.
- He is a Registered valuer of the Central Board of Direct Taxes, a Professional Engineer and also a Chartered engineer. Valuation is his main profession..
- He was the National Vice-President of the Institution of Valuers (India) for 11 terms.
- He is a regular contributor of articles in the Indian Valuer Journal from the year 1985. His articles especially his regular column “Questions & Opinions” are very popular among the practising valuers in India.
- His book “Guidelines on Valuation for Banks” (2002) is used to be referred by many banks. The valuation formats designed by him were accepted and adopted as the formats by many banks in the country.
- His son K. Arun and daughter B.K. Aruna are also approved valuers and they also contribute articles to the Indian valuer journal.
- His guru: Mr. C.H. Gopinatha Rao, Chennai.
- His mentor: Mr. R.K. Gandhi, Mumbai.
- His role model: Mr. S. Rajaratnam, Chennai.
- His best students: Thousands of valuers in the country
