WEALTH TAX • IMM0VABLE PROPERTY

Immovable Property Wealth Tax Valuation — Rule 3; Section 50C; Urban Land; Schedule AL

Professional valuation of residential property, commercial property and urban land using the relevant Rule 3 ALV methodology, historical market evidence and asset-specific valuation analysis for wealth tax, retrospective assessment, Section 50C and Schedule AL requirements.

Rule 3 Capitalised ALV Section 50C FMV Defence Schedule AL Asset Disclosure
PROPERTY VALUATION FRAMEWORK
03

Immovable Property

Residential property, commercial property, urban land and historical property values assessed using the applicable valuation methodology and evidence.

RULE 3 • CAPITALISED ALV

Rule 3 Capitalised Annual Lettable Value Methodology

The Rule 3 framework focuses on determining the Annual Lettable Value (ALV) of the property and applying the appropriate Year’s Purchase (YP) multiplier to arrive at the relevant FMV.

01 RESIDENTIAL

Residential Property ALV Assessment

The registered valuer determines the Annual Lettable Value (ALV) by assessing the reasonable market rent for comparable residential property in the relevant location.

  • Comparable market rent
  • Property size and floor
  • Available amenities
  • Municipal area and location
  • Property maintenance
  • Relevant tenancy status
RULE 3 FMV FMV = ALV × YP
02 COMMERCIAL

Commercial Property ALV Assessment

Commercial valuation considers the reasonable rent applicable to comparable commercial premises and the characteristics of the relevant commercial market.

  • Office premises
  • Retail property
  • Industrial property
  • Comparable commercial rents
  • Location and market conditions
  • Relevant tenancy risk and term
COMMERCIAL ASSESSMENT ALV × Appropriate YP
YP

Selecting the Appropriate Year’s Purchase

The appropriate YP multiplier is selected with reference to factors such as location, quality, age and tenancy status. For commercial property, the supplied framework identifies the typically lower YP in consideration of higher risk and shorter tenancy terms.

INCOME TAX • SECTION 50C

Section 50C and the Immovable Property FMV Defence

Where the actual sale consideration for immovable property is below the applicable stamp duty value, Section 50C may deem the stamp duty value to be the sale consideration. The supplied framework identifies the registered valuer’s FMV certificate as an important part of the valuation evidence.

50C

Stamp Duty Value vs Actual FMV

Section 50C applies where the stamp duty value / circle rate value exceeds the actual sale consideration in the circumstances covered by the provision.

01

Section 50C(2)

The supplied content identifies Section 50C(2) as the mechanism through which the assessee can contest the stamp duty value, including through an Assessing Officer reference to the Valuation Officer.

02

Registered Valuer FMV Certificate

A comprehensive FMV certificate documents the valuation basis and supporting evidence demonstrating the concluded market value.

03

Documented Methodology

The supplied framework identifies market comparison, income capitalisation and cost approaches as valuation evidence that may be relevant depending upon the property.

SECTION 23

The Section 23 Annual Value Relationship

Section 23 of the Income Tax Act 1961 determines the annual value of house property for income-from-house-property taxation.

CONCEPTUAL BASIS “The sum for which the property might reasonably be expected to let from year to year.”

The supplied content identifies the Section 23 fair rental value concept as conceptually related to the Rule 3 ALV methodology.

URBAN LAND

Urban Land Wealth Tax Valuation

Urban land within the relevant municipal or cantonment limits, including land within the specified 8 km area, is identified in the supplied framework as a taxable asset under the Wealth Tax Act 1957.

FMV Methodology

Market Comparison Comparable Land Sales ₹ / Sq. Ft. ₹ / Sq. Yard ₹ / Sq. Metre Income Capitalisation

Comparable transactions are considered with reference to location, zoning and market evidence. Income capitalisation may be relevant where the land is developed or income-generating.

HISTORICAL FMV • SCHEDULE AL

Historical Reconstruction & Schedule AL Disclosure

Immovable property may require valuation using historical evidence where the purpose involves a pre-AY 2016-17 wealth tax assessment or a current Schedule AL disclosure.

01
RETROSPECTIVE ASSESSMENT

Historical FMV Reconstruction

The supplied framework requires reconstruction of the property’s FMV as on the relevant wealth tax valuation date, including the 31st March of the applicable assessment year.

Historical Evidence
  • Historical comparable sale data
  • Historical circle rate notifications
  • Historical rental market evidence
  • Historical sale deeds
  • Historical municipal valuation
  • Historical auction records
AL
ITR • SCHEDULE AL

Immovable Property Asset Disclosure

The supplied content identifies Schedule AL Category A as the immovable property category requiring relevant asset information.

Property Address Identification of the property
Cost of Acquisition Acquisition cost information
Current FMV Fair market value

A professional FMV certificate can support the Schedule AL Category A immovable property disclosure described in the supplied framework.

GOVERNMENT APPROVED VALUATION PRACTICE

Need an Immovable Property FMV Valuation?

Discuss your residential property, commercial property, urban land or historical valuation requirement with A2Z Valuers for a professionally documented FMV valuation report.

☎ Call +91 9999992343 → Request Valuation Brief
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