Points to be remembered for guideline value and market value

KNOWLEDGE BANK

LET KNOWLEDGE SPREAD

Message from B K Aruna 02.09.2023

Ten points to be remembered with regard to guideline value and market value :

1. Guideline rate (GLR) is the unit rate of land fixed by the registration department mainly for the purpose of fixing stamp duty for the sale deed at the time of registration.

2. Registration of deeds is a state subject and the procedure of registration varies from state to state.

For example, In Tamil Nadu, as on 04/2023, the stamp duty is 7% and the registration charge is 2%.

3. Guideline rate, circle rate, ready reckoner rate and ASR (Annual Statement of Records for guideline value-in Maharashtra) are the words used in different parts of the country. They denote the same meaning.

4. Even though the guideline rates are the same for a particular survey number or road but the Prevailing Market Rate (PMR) may be different even for the adjacent site.

5. There is a wrong notion among many that GLR is the most authenticated rate but there are many court judgements which insist that market value is different and guideline value is different.

6. The guideline rate plays a significant role in

i) Capital gain valuation,
ii) Land acquisition and
iii) Fixation of fair rent in certain states.

7. Guideline rate and market rate are not the same. Similarly, guideline value and stamp duty value are different.

8. If the mutually agreed price of a land is Rs. 10,000/- per sq.ft. and the GLR is Rs. 15,000/- per sq.ft. then, the stamp duty has to be paid for Rs. 15,000/- per sq.ft..

9. If the mutually agreed price of a land is Rs. 15,000/- per sq.ft. and the GLR is Rs. 10,000/- per sq.ft., then a stamp duty not less than Rs. 10,000/- per sq.ft. is required to be paid.

10. When the difference between GLR & PMR is more, then the valuer is advised to value based on PMR and record the GLR in his report if the purpose of valuation is for collateral security for bank’s purpose.