Stamp Valuations
Tuesday, July 12th, 2011 |
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Stamp Valuations
Day 210 of 365 Things To Do In Edmonds, WA - Aurora Stamps
What do you mean by valuation of properties from the banker's point of view ?
Valuation in a broad sense means assessing the worth of something, which may be a tangible asset like land or something intangible like goodwill.
The Oxford Dictionary defines valuation as "estimation" especially by professional valuers of a thing's worth; worth so estimated, price set on a thing;
Valuation has significant impact on the economic activities relating to property comprising Land and building, plant and machinery, movable property like stock and intangible assets like goodwill of a business.
Valuation is essential for fiscal and non-fiscal purposes. The fiscal purposes are levying taxes like municipal tax on land and building, stamp duty by State Government, Income Tax on capital gains arising out of transfer of property or preventive purchase of immovable property by Government of India
The non fiscal purposes are grant and recovery of advances by banks, insurance of immovable/movable property, award of compensation for compulsory acquisition of property for public purposes
The non fiscal purpose will also include computation of betterment levies under town planning laws, valuation of tangible, intangible assets owned by Government of India, State Governments, Public Sector Undertakings, statutory bodies like Port Trust for privatizations as well as for ascertaining return on investment. Liquidation of assets for recovery of settlement of financial disputes by the commissioners, High Courts and official liquidators will also come in the category. Computation of rent at a time of leasing of property and subsequent renewal of leases also will require valuation.
Valuation cannot be tied up by rigid laws of nature or science. It also cannot work under fixed and unflexible set up of principles because it has great dependence in human nature and individual's thinking.
Movable or immovable property has value in the market because of the four basic attributes viz., Utility, scarcity, demand and transferability
Each of the above four factors contributes to the ultimate value of the property in the open market
When there is little utility for the product, price is reduced
If asset is scarcely in a situation, its price increases
When there is a demand for the product, price increases
In case of difficulty in transfer of title of the property, its price reduces
These are the basic known attributes of movable and immovable properties
But valuation of immovable property is more complex in nature. Many more factors are required to be considered for valuation of an immovable property. The infinite factors which affect the value of any immovable property in an open market may not be present in the case of each single property but varieties of these factors do exist in different properties
About the Author
This article has been submitted by A. Gauri Sankar, a retired bank official from a nationalised bank in India. He is a trainer for banking subjects and he is also a trainer for soft skills. He can be contacted at: gausan51@gmail.com and more articles can be had from his blog: gaurisankars@blogspot.com