KNOWLEDGE BANK
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Message from B K Aruna 11.09.2023
Ten points to be remembered by a registered valuer when he wants to do valuation for capital gains :
1. Before accepting the valuation assignment, the valuer must know clearly for what section of Income Tax Act, he is required to do valuation.
2. The date of sale is the criterion to proceed with the valuation.
3. If it is sold before 31.03.2017, the old cost indices are to be used. The cutoff date is 01.04.1981.
4. If it is sold after 01.04.2017, the new cost indices are to be used and the cutoff 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 arrived at 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 adopt constant percentage method instead of straight line method. When the age is below 14 years, both methods will give almost the same result.
9. The income tax department has published *two books on Guidelines on valuation :
i) Guidelines for valuation of immovable properties 1999 – Income tax department, Chennai.
ii) Guidelines for valuation of immovable properties 2009 – Directorate of Income Tax, New Delhi.
(Note : *These books can be freely down loaded from the internet).
The registered valuer must be thorough with the guidelines given in the book in order to prepare a foolproof 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
