July 19, 2016

Guidance Value of Bangalore – How it affects property price?

Do you know what is Guidance Value of Property? Recently Government of Karnataka revised the Guidance Value of Bangalore and whole Karnataka effective from 1st April, 2016. Let us see the meaning of Guidance Value and how it affects the property buyers.

What is the meaning of Guidance Value?

Guidance value is nothing but a price of the property as per local Government. For example, Government of Karnataka declares the Guidance Value for Bangalore. You can’t register the property below this price. I will try to explain the same from below image.

In guidance value, there are two types.

# Land Value-This value is only for lands not for any constructed properties. Hence an open site value is measured as land value.

# Composite Value-This value is for the constructed properties where it includes both land value as well as the value of buildings.

Guidance Value of Bangalore

You noticed that for Property B, the market price is Rs.8,000 per Sq Ft. But the Government Guidance Value is Rs.4,000 per Sq Ft. You can register the property at the rate anywhere between Rs.4,000 to Rs.8,000.

In the case of Property A, the market is price is Rs.2,000 per Sq Ft. But the Government Guidance Value is Rs.4,000. Hence, you are not allowed to register the property below the Government Guidance Value.

It clarifies that you are no longer allowed to register your property below the price of Government Guidance Value. However, you are free to register at any price which is above the Government Guidance Value.

Hope you now got an idea about Guidance Value.

Why Government raises the Guidance Value of Properties?

For Government, the major revenue source is property registration. By raising the guidance value, Government expects higher revenue. Therefore, once in 3-4 years usually there will be an increase in guidance value.

How Guidance Value of property affect the prices?

Let us say Property XYZ is currently selling at Rs.4,000 Sq. Ft. and Government Guidance Value is Rs.3,000. Then there is a sudden jump in Government Guidance Value from Rs.3,000 to Rs.4,500. In such situation, property owner of XYZ will definitely not willing to sell his property less than Rs.4,5000. Becuase, he know Government itself fixed the price at Rs.4,500 then why he want to loss by selling it lesser than the Guidance Value.

In this way, whenever there is a revision in Government Guidance Value, the price of real estate will jump. It is not the affordability of buyer. But the price, below which no one ready to sell. Hence, with revision in Guidance Value, those who are in real estate business will feel happy. But the buyers feel it sad as the price of real estate will automatically raise.

What is the Guidance Value of Bangalore for 2017?

Recently Government of Karnataka revised the Guidance Value of Properties. This again boosted the price rise in real estate market. The last revision was in the year of 2014. So again after 2 years one more revision. This shows how Government is eager to earn more by raising the Guidance Value of Properties across Karnataka.

The Guidance Value of Bangalore is divided into A, B, C, D, E and F zones. Zone A means highest guidance value, which starts from Rs.7,000 per Sq Ft and above. In the same way, Zone F means Rs.1,000 per Sq. Ft and more. The

This is how the Guidance Value of Bangalore is divided. (Below image is based on the guidance value of 2016)

Guidance Value of Bangalore 2016

It is hard for me to list all areas of Bangalore. Hence, I uploaded the Government notification itself. You can easily find out the area and guidance value respectively. The complete list is available “Download Guidance Value of Bangalore For 2017“.

Refer my latest post related to real estate-

Any doubt regarding Guidance Value?

93 Comments

  1. Hi Basavaraj, since the new indexation starts in 2001 now, I need to find out valuation for my plot on 2001 to arrive at the Fair Market Value to calculate my indexed cost of my plot. Do you how can get the past valaution of guidance value?

    Reply
  2. Dear Basavaraj,

    Hope you are doing well.

    I came to know about your blog today while googling. I read so many threads related to financial planning to real state. All were very nice and well explained.

    I am planning to buy a property in Bangalore which comes under panchayat khata and want to buy but problem is that the land owner/builder is not allowing to register more than the guidance value because he will have to pay more tax. I have read your all suggestions/threads to not register below than market value. But I like that plot and want to buy by taking bank loan.

    So, whether it creates any problem later apart from the capital gain tax(mentioned in your blog)? Is it possible to take the loan based on agreement value and register on the guidance value ?

    One more thing I must say that without loan I can not buy and I have only 30% of the market value.

    Thanks,
    Goyal

    Reply
    • Dear Sumit,
      If you are ready to pay more tax because of to benefit the seller, then go ahead. There will not be any other issues. Loan will be sanctioned based on the valuation. Hence, it is hard for me to predict anything.

      Reply
      • Dear Basavaraj,

        Thank you for your reply.

        Actually This plot is very near to the main road compare to others in the same area. That is why I am not worry abt the capital gain tax(But other issues should not be there).

        I have some other queries like what are the documents we should ask to the land owner for the verification and what are the documents we need to get from our side before going to hire a lawyer? And please also tell us priority wise like doc A must be provided by the land owner/builder, doc-B we can get it from X source(pls mention source also). If the doc C is not provided by him then we must not go ahead.

        Note:- This above query is related to panchayat khata plot.

        Thanks,
        Goyal

        Reply
        • Dear Sumit,
          It is better to consult a lawyer regarding document verification.

          Reply
  3. Pls let me know the guideline value in the year 2001April area HSR layout sector 1,28th main

    Reply
  4. Pl let me know the Bangalore -BSK 2nd Stage
    24th main
    Guidance value in 2001

    Reply
    • Dear Harsha,
      It is always better to go for the market (or actual value) value than following guidance value for the sake of saving taxes.

      Reply
      • Thanks Mr.Basavaraj

        Reply
  5. sir i bought a site at nelamangala gramthana site bangalore buy paying a intial amount of one lac.now am planning to register.please guide me so that i dont face any problem in future.

    Reply
    • Dear Shanthi,
      It is hard for me to guide with a mere few lines of your sharing. I suggest you to take an advice of an expert lawyer.

      Reply
  6. This is a very useful post Basu. We are looking for guidance value for the year 2018 for a property we are buying in Bangalore. Please can you provide the link for the same. Thank you so much.

    Reply
    • Dear Bindu,
      There is no change in the values which was published earlier. For further reference, you can check HERE.

      Reply
      • Thank you so much. On a seperate note, your blog is too good 🙂

        Reply
  7. Hi Basu ,
    I am planning to buy a ready to move new apartment in Bangalore. Builder has asked me to go ahead and register with Guidance value rather the actual Sale value , obviously I know registry cost would be less in that case . However , I am bit worried , if there would be any consequences if I like to resell the property after few years ?

    Reply
  8. I am selling land in Anjanapura. I had bought it in 1996 and hence I must now find the “fair value” as of 2001-02. Can you please let me know how I can do that? also, if it is based on BBMP guidance value, how do I find the guidance value listing for 2001-02?

    Thank you in advance.

    Niranjan.

    Reply
  9. Hi, It is a very nice article. I am about to buy a property. As usual, as you described, in bangalore market value is way greater than government guidance value. So, my question is Can anyone register the property to a value between guidance and market value? In fact, in the article, you have answered this. But, during my enquiry i came to know that if one registers to a value between guidance value and market value, according to stamp duty act one may get a notice for lower stamp duty payment. Can you please throw some light on it.

    Reply
    • Mohan-Market value means your sale deed value. Hence, if that is higher than the guidance value, then definitely Govt will send you notice to pay more right?

      Reply
  10. Hi Basu,

    I have already owning an apartment in Chennai. I have moved to Bangalore two years back due to job shift. Here I am staying in a rented house and paying Rs 12000 as monthly rent. So now I am planning to buy an apartment (budget – 30 Lakhs) in Bangalore so that I can pay the EMI in place of monthly rent (same amount or bit more) after some years property would be mine. If I buy a home , I can also get section 24 exemption to reduce my tax (as I am in 30% IT slab)

    However I am already investing in mutual funds for retirement goal. (Rs 11000 SIP per month)
    Large cap -45%
    ELSS – 20%
    Mid – 25%
    small – 10%

    I know second house is not a good investment idea. but considering the above situation kindly advise whether to go or to continue in rented home.

    Reply
    • Kindly note
      I can pay at least 40% down payment so that I can avoid huge amount of EMI and can py as near to my rent. Please comment on this also.
      Many thanks!

      Reply
    • Hari-Do you think buying a property for the sake of tax saving and rent saving is the BEST idea? Let us assume your interest on home loan is Rs.2,00,000. You upfront save around Rs.60,000 in tax. Rs.1,40,000 you will give it to bank as an interest for home loan. What if this Rs.1,40,000 in your pocket at the end of each year? Buying a property for the sake of saving tax is the biggest mistake.

      Reply
      • Thanks Basu… I am not buying home for tax purpose… I am very clear after reading your articles.. I am looking for a house for my living as I decided to settle down in bangalore.. my plan is to give Max of down payment and keeping the loan as low as possible so that the Emi is almost same as rent and inturn interest is also low
        .. pls advise.. kindly note I am not going for luxury home.. a contended home for living ?

        Reply
          • Hi Basu, I am looking to stay in bangalore until my retirement which is at least 20 years from now..though I am an IT professional, place changes are evident for me but Bangalore is just 100 km away from my native town So I mostly will stick to bangalore as that would be very convinient to travel every weekend to take care my parents until my retirement. ..after retirement will go and stay in my own home in native.. in such scenario pls advise..I am too confused to buy or not? Need ur assistance…

            Reply
            • Also I am planing to buy a budget apartment in Bommanahalli – begur road in bangalore due to school and my office connectivity

              Reply
            • Hari-In that case, stick to your budget (Rs.30 lakh) even if it is the second-hand apartment. Make sure to pay down payment as much as you can afford. Also, make sure you repay at the earliest than just following EMI.

              Reply
              • Sure Basu, actually your suggestion was my plan…much appreciated .many thanks for your advice..

                Reply
                • Hi Basu,

                  As suggested in previous posts, I have now purchased a new apartment worth of of 31 L (I tried max but not possible within 30 lac as you advised.), I have paid nearly 50% and going for 16 lac loan.

                  I want to close the loan as soon as possible ( realistically 3-5 years) to save for my retirement goal through mutual funds . In that case which one would be effective in terms of taxation and returns perspective. Please note I am in 30% slab.

                  1. Paying as much as possible as monthly wise along with EMI to bank to reduce interest.
                  2. Invest in any fund (balanced/debt) fund and then going for bulk prepayment in 3-5 years. Kindly note I have each one fund of Large (40%), mid(30%)., ELSS (20%) and Small (10%) cap funds in my portfolio.

                  my debt components are EPF & SSY. age -31

                  Reply
                    • Hi Basu,

                      Many thanks! I am great Fan of this link and a regular visitor. 🙂

                      Now, I have a fair understanding of Fund selection and other stuffs after reading your portal. However I need your guidance to prepay my loan. Can you please suggest best out of below two ideas.

                      1. Paying as much as possible as monthly wise along with EMI to bank to reduce interest.
                      2. Invest in any fund (balanced/debt) and then going for bulk prepayment in 3-5 years.

                      or if please suggest if some other better idea apart from the two.

  11. I have a question, I am honoring a sale price my uncle agreed to at Rs 455/sqft but the guidance value is Rs 800/sqft. Does my capital gains tax be based on selling price or guidance value? If it is guidance value, then what can I do now?
    Thank you very much. Property near Ramohalli area.

    Reply
    • Balaji-In your case the selling price is less than guidance value. Hence, you have to register as per guidance value and taxation is also be based on guidance value.

      Reply
  12. Dear Basavaraj ji
    I recently sold ancestral property situated in Subramanya nagar, near Rajajinagar. Could you kidly help me out as to where and how to find the land price as on year 2001 so that the capital gains can be calculated. Kindly reply to the given emai l . thanks
    sincerely
    sudh a

    Reply
    • Sudha-You have to refer the guidance value and the base year indexation for the calculation of capital gain.

      Reply
    • Hello
      My instant guess is that the ancestral property referred to was acquired long before 2001, not in 2001; and your problem is about ascertaining ‘the value’ (indexed cost) as of 2001, being the new ‘base year’ as lately prescribed ! Should that be so, the same problem is most certain to be faced by one and all similarly placed, unless and until the Revenue comes out with the necessary clarifications, being pressed for but awaited as yet !
      SUGGEST TO LOOK UP THE ONGOING DISCUSSION/ THOUGHTS EXCHANGED – on Facebook/ Linkedin- in case you are connected .

      Reply
        • You refer to ‘guidance value’ ; which, so far as known, relates to sale price/ ‘consideration for transfer’ of a property, not its ‘cost of acquisition’ , so as to apply indexation ! Suggest to better review and enlighten the reader, ‘sudha’ appropriately !!

          Reply
          • Vswami-If the property is acquired from the previous owner, then the cost of acquisition should be the cost of acquisition of the previous owner. In Sudha’s case the holding period is more than 3 years. Hence, it is considered as LTCG ONLY. Regarding the indexation, the calculation goes as below.
            Cost of Acquisition=(Cost of Acquisition/CII for the year which asset was held by the owner or 2001-02, whichever is later)* (Cost of inflation index for the year in which the asset is transferred).

            Reply
  13. can you please update the new guidance value notification for 2017-18 for bangalore ?

    Reply
    • Reji-There is no change for this FY 2017-18. It is all rumors created by builders to close their SELLING.

      Reply
      • They have already raised the guidance value from 1st apr in Bangalore. Already put it on notice board in sub registrar office.

        Reply
  14. Hi,

    How is guidance value of a flat calculated. Is it the prescribed price per sqft/sqmtr + value of Undivided share?

    Presently the guidance value for the flat is Rs. 6,000 per sqft. We are entitled to undivided share of land of 300 sqft.
    And the area of the 2bhk flat is 1600 sqft. Should we also include the extra service tax and sales tax we are paying the builder to determine the total guidance value? Please help me calculate the guidance value for the same.
    Also there was a news on The Hindu on likely revision of guidance value in October if the market improves.

    Reply
  15. Hello Basavaraju,

    I am buying a property (Independent house) near KR Puram. Due to loan processing the registration was delayed & I am planning to do registration on April 2017.

    And I am getting the information, that its better to do registration within March 2017 because of the below reason.

    1. Because of the revised guidance value the registration cost may increase

    2. Register offices may stop registration due to new process of E-Property registration

    And my seller is not pushing me to do registration within March 2017.

    I am totally confused & worried about these news. I request you to kindly suggest and provide some clarification on the same

    Thanks in advance

    Regards
    Manikandaraja

    Reply
    • Manikandaraja-It is nothing but RUMOR to do as much as business within their targetted March month. Rest you decide.

      Reply
      • Hello Basavaraj,

        Thank you for the clarification.

        Regards
        Mani

        Reply
  16. Thanks so much for your great informative post. Recently purchased a 2bhk flat in Doddanagamangla area, not yet done with registration. My builder is pushing me to complete registration on/before 03/31/2017, claiming that Guidance value (in turn stamp duty & registration fees are going to be increased from April1, 2017).

    Ive googled for any official announcement of the Guidance value/ stampduty hike, but couldn’t find any such news(old news of 2014,16 were there , but no 2017 hike news, at least from what I can find)

    Can you please help me clarify if I’m missing anything & if it’s a Genuine news/advice that my builder has been giving me.

    Appreciate your kind, early response. Thanks in advance!!

    Reply
    • Naga-They created this rumor just avoid any issues before RE Bill come into play.

      Reply
      • OFFHAND

        Any increase in Guidance Value may be of real concern ,only that were to exceed the actual price agreed and paid,
        Consequent upon the recent amendments of the related income-tax provisions, going by the same logic/reasoning, there may be a case to take on with the stamp duty authorities and urge that stamp duty ought not to be levied on more than the actual price agreed and paid.

        Suggest to refer the personal thoughts / viewpoints shared on those lines, by way of feedback-input , on Facebook and Linkedin.

        courtesy

        Reply
  17. Hello Sir,
    I applied for loan from SBI for purchasing a flat in Kadugodi area. SBI insisting me to do registration on the Sale agreement value, not on Guidance value.Either I have to give a suppliment agreement and a under taking which states that if Karnataka government later finds that the stamp duty is paid less than i have to bear that due or it will be added in to the loan. My seller( land owner share) is not ready to allow me to go for registration on the sale agreement value, but he is ready to give me the suppliment agreement.Sir, can you please let me know whether it will be ok if I do an registartion on guidance value? In future there will not
    be any issue?
    P.S: Guidance value(per sq ft) is lesser than the actual price.

    Thanks
    Ranjan

    Reply
    • Ranjan-It is always BEST for YOU to go for registration on SALE value than GUIDANCE value.

      Reply
      • Thanks for the reply Sir, But the builder is not ready sir, He is citing me a reason that already others have done registration on the guidance value. And he is asking me to pay the 75 % of the tax dues that he will be paying on sale value registration, if I want the registration on Sale Value. Please advise.

        Reply
        • Ranjan-It is his or others problem. For the sake of saving his tax, he is forcing you to do this act. However, at the time of selling you have to pay the higher tax due to higher capital gain. Hence, in future it is you who bear the higher tax for the sake of the builder’s tax saving malpractices. Now you decide how loyal and reliable the builder about the building he built and quality of that.

          Reply
    • Hi Basavaraj,

      My builder is saying that Karnataka Government is increasing the stamp duty charges by 30%. Can you let me know if this true.

      Looking forward to your advise.

      Reply
      • Ajay-As per me there is no such news. In my view all these are rumors.

        Reply
  18. Thanks for the informative article Basavaraj.
    I have one query, how often is the guidance value revised? I believe for Bangalore it got revised last in starting of FY16-17.
    Does it happen every year?
    The reason i am asking is my apt builder is pressurising me go for registration before 31-Mar otherwise the guidance value will increase.

    Thanks
    Kunal

    Reply
    • Kunal-Your builder spreading rumors just to benefit HIM. There is no such rules to revise the guidance value. However, Govt do it to increase it’s revenue (also to support real estate business which is mainly held by these politicians).

      Reply
      • Thanks a lot for the clarification.

        Reply
  19. I am planning to purchase 2 BHK apartment (1200 sq. ft) (Re-sale) in yelahanka. which is 5 years old. The owner purchased the same from builder at 36-38 Lac on 2011. He told me that he has done wooden work in the apartment which cost around 2-3 lac. Now he quote for the same at 46 Lac excluding the registration and legal charges (Including all amnesties like swimming pool, club house, children play area, lift, one uncovered car parking). He has the loan for the same. the current rate in yelahanka new town is around 4000 rupees per sq.ft.
    Now as the property price will going down and market also volatile. whether It is right for me to purchase the apartment at 46 Lac.

    Reply
    • Arindam-I can’t comment as I am not aware the property location and details of the property.

      Reply
  20. The guidance value table (column headings) are given in kannadiga. Can they be translated into English please.

    Reply
  21. Dear Basu,

    Thanks for the article. Really informative.

    I have a doubt, i am purchasing a property worth 33 L (quoted by seller) in bangalore bomanahalli area. However, the property evaluator of SBI bank has estimated it to be 48 L. I would like to know how it is going to impact me w.r.t stamp duty or any other charges gets increased or will it be levied on 33 L only. Pls clarify.

    Regards

    Reply
    • AK-Neither go with SELLER nor EVALUATOR, first check what is the guidance value. Then we discuss the things.

      Reply
  22. Govt has released guidance value for various apartments. Suppose it has fixed Rs. 40000 per sq. mtr for a particular apartment and if the said apartment has roads on two sides whether SRO can add 10% more as guidance value. In the guidance value it is mentioned that if plot (nivesha) is having road on two sides guidance value is to be increased by 10%.

    Reply
    • Krishna-I am not sure about this. Can you provide the link of the same?

      Reply
  23. Dear Basavaraj,
    In case the property id bought at a market price which is higher than the guidance value, which of the following is better for the future?
    a. Pay registration fee and stamp duty as per the actual cost price .
    b. Pay the above as per the guidance value.
    Thanking you.

    Reply
    • Prakash-Always register the property at the rate you purchased. Buyer always insist to lower it just to lower is taxation. But in future it hurts YOU, not to him.

      Reply
  24. you need to correct this statement “In the case of Property B, the market is price is Rs.2,000 per Sq Ft. But the Government Guidance Value is Rs.4,000. Hence, you are not allowed to register the property below the Government Guidance Value.”. You are actually referring to property A in the example.

    Reply
  25. Dear Mr. Basavaraj,

    Very informative article. I am forced to sell my flat 50% lower than guidance value on account of age of flat (12 yrs), tier-3 local builder with little amenities, not so great construction quality. After many showings lasting for an year, I could not get any offer matching with guidance value and had to settle for 50% of GV.

    In such circumstances, am worried about 50C section of income tax act. If the value is considered at par with guidance value ignoring the actual value, my CG liability would be huge and disadvantageous for both buyer and seller.

    In case of distress sale like mine, what is the best solution to avoid steep CG tax liability who is already suffering with lower sale price.

    Reply
    • Krish-It is sad and another face of reality sector. But nothing can be done than paying as per laws. Only way forward for you is to re-invest in property and claim tax benefits.

      Reply
      • Mr Basavaraj

        I just happened to stumble per chance your personal blog; in particular the last Q of Krish and your reply thereto. On the first blush, i for one fail to readily understand and appreciate the purport or import of both. My hunch is better to have a re-look through.
        Incidentally, may you refer the Message sent through Facebook, inviting to share your thoughts/views , if any, in reference to certain recent amendment of the law (sec 50C) and further developments. May be, that would provide more food for thoughts on the indicated lines vide Posts on my Timeline.

        Reply
  26. Hi Basu,
    I have a question regarding registration of independent house.
    I am constructing a house in a plot registered in my name.
    Do I need to register the house after construction? Or simply pay the municipal taxes and occupy the house?
    Please clarify
    Thanks

    Reply
    • Pradeep-You no need to register once again. But you have to pay the tax as per the tax applicable on buildings of that area.

      Reply
  27. Dear Mr. Basavaraj,

    Thanks for this clarity on Guidance value in Bangalore. You may be aware that with the 2016 revision some older flat properties in Whitefield have guidance value higher than market value.

    In such situations, can the stamp duty and registration charges be paid on the guidance value, but declare the true transaction value in the sale agreement which is lower?

    What are the tax implications of this for buyer and seller?

    I am talking as a genuine seller making a full white money transaction. Your guidance is much appreciated.

    Warm Regards,

    Reply
    • Sanjay-I understood your concern. When you paid the stamp duty and registration charges as per guidance value, then there is no point in showing actual value of sales proceed. Because even as per tax rules, the fair value of property is stamp duty value but not the market price (in case the market price is below the guidance value).

      Reply

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