Fair market value or circle value

Dear Sir,

Yes you need to obtain valuation report for the FMV as on 01.04.2001 from the registered valuer with the govt. FMV will be more than circle rate as on 01.04.2001. FMV is calculated to give the benefit of cost inflation before base year.

Thanks

Dear Sir,

For properties sold after 1 Apr 2017, to calculate Long term capital gain on sale of property one would need to use the cost inflation index numbers available from the financial year 2001-2002. Many people who have purchased or inherited property that was purchased before 2001, often question on how to find the indexed cost of acquisition of a house.

Circle rates mean the minimum rate of property that is prescribed for a particular area. The circle rates are fixed by the state government or the local development authority. It

It is advisable to get the valuation of the property done from the registered valuer. Assumptions of any type for consideration of value shall not be entertained by the income tax department. In case of any enquiry, the department will consider the value stated in the valuation report from a registered valuer. Typically, a valuer takes 3 to 4 days to prepare a valuation report.

How to find Registered Valuers?

Typically its word of mouth or search in google. Many companies like governmentapprovedvaluers.com do it in Delhi and ZippServ in Bangalore, Pune.

Thanks

Ajit Jain

Founder - Vincent Advisors

This benefit is given under income tax law to compensate the loss of inflation to the assessee between the date of purchase and base year as on 01.04.2001.

Hi Sir,

Hope you are doing well !

Just get the valuation report from registered valuer. Valuation report is the most authentic document for property valuation.

We may arrange valuation report for you.

Thanks & Regards,

Payal Chhajed

You need to obtain valuation certificate from IT approved valuer for value of property as on 1st April 2001. For past valuations valuer refers to circle rate of property as on 2001. Also value could be valued slightly higher if you provide any bills of improvements done in property before 1st April 2001. Secondly sometime location of property like corner plot or park facing etc can also have impact on value of property.

Specific provision in IT act:

Yes, capital gain indexation rules specifically mandate to valuation of property purchased before 1st April 2001.

Also in case of dispute AO can refer your case to approved valuer. ( Hence, it is advisable to do it through registered valuer in advance)

Dear Sir,

According to the Income-tax Act, 1961, FMV shall be the higher of the cost of acquisition of the property or the price that the property shall ordinarily sell for if sold in the open market. There is no fixed formula to calculate FMV of a property. you need to obtain valuation report for the FMV as on 01.04.2001 from the registered valuer with the govt. FMV will be more than circle rate as on 01.04.2001. FMV is calculated to give the benefit of cost inflation before base year.

Warm Regards,

Karishma Chhajer

Hi,

Please refer the replies in line below:

1. IT people shall consider only the value computed by the valuation officer.

2. FMV determination shall be determined on the basis of valuation report

3. Valuation report can be obtained from the govt valuer registered authority. If you need that, please feel free to connect.

Happy to help.

Thanks

Damini

Hi,

You can get a valuation report as on 01.04.2001 from a registered valuer. FMV will be more than circle rate as on 01.04.2001. You will get the indexation benefit on the value from 2001 onwards to compute the capital gains.

Regards,

Nikhil.

The IT department will accept the value ascertained by the registered valuer

Regards,

Nikhil.

FORM THE ASSESSMENT YEAR 2018-17 BASE YEAR IS CHANGE FROM 2001 INSTEAD OF 1981

MEANS PROPERTY SOLD AFTER 31.03.2017

YOUR HAVE TO TAKE VALUATION REPORT FROM REGISTERED VALUER FOR VALUATION OF PROPERTY

ONLY FARE MARKET VALUE IS TAKEN CONSIDERATION FOR PURCHASE COST

AS PER SECTION 50C

IF THE CONSIDERATION IS LESS THAN THE CIRCLE RATE THEN THE CIRCLE RATE WILL BE THE SALE PRICE (IT MEANS CIRCLE RATE AND SALE CONSIDERATION WHICH EVER IS HIGHER IS SALE PRICE)

Dear Sir,

The income tax act provides that the FMV or circle rate/government valuation whichever is higher shall be used for computation of cost of acquisition. As circle rates are usually lower than market rates the FMV in majority cases is considered at market rates prevailing during that period.

The concept of circle rate was first introduced in 1999 and has it's negative points as highlighted by you. It is therefore advisable to obtain a valuation report from registered valuer in such cases.

The value as determined in the valuation report shall be accepted for indexation by I.T. officer as it is the best available proof for them and the I.T. officers cannot supersede the Income tax Act.

Hi,

Please note that circle rate is one of the many methods to identify the FMV. There is no fixed formula prescribed under the income tax act to derive FMV.

In practice, a valuation reprot of government approved valuer are considered as the best option to derive FMV. Income tax department also gives credibility to the report.

Please feel free to call/ revert in case you need more clarity.

Thanks and regards

Abhishek Dugar

CA CS B. Com

Hi

Both circle rate and FMV are acceptable.

You can either take stamp duty value of the property as on 01.04.01 or get a valuation done by a certified valuer.

There are no specific provisions in the Income tax act in this regard. Both the above methods are acceptable by the income tax department.

If there is any dispute over FMV as on date of transfer then get report form reg valuer.

Hi

You have to consider FMV for capital gain calculation purpose.

Get the valuation done from registered valuer and its report will be accepted by IT department .

Hope it help