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.