What the law allows, why the stamp duty cap does not bite in Kerala, and what a report must rest on
Rabish Ammathur — Registered Valuer, Land and Building — Kozhikode (Calicut), Kerala
Anyone selling land or a building in Kerala that was bought or inherited before 1 April 2001 has to fix a value as on that date. This page sets out what the law permits, what makes a value defensible in an assessment, and what I need in order to write the report.
Where a capital asset was acquired before 1 April 2001, section 90(9)(b) of the Income-tax Act, 2025 lets the seller substitute the fair market value of the asset as on 1 April 2001 for its actual cost. The choice is the seller's. It is usually the better figure for property held for decades.
Section 90(10) then caps that substituted value: for land or building it shall not exceed the stamp duty value of the asset as on 1 April 2001, wherever available. The words to notice are "wherever available".
The cost inflation index used to index the substituted value is notified under section 72(8)(a) of the Act. The base year is 2001-02, taken as 100.
Kerala had no notified fair value of land on 1 April 2001. The fair value scheme rests on section 28A of the Kerala Stamp Act, 1959 and the Kerala Stamp (Fixation of Fair Value of Land) Rules, 1995, but the figures themselves were first notified and brought into force in 2010. The Registration Department's own order recording the 2023 revision says as much: fair value of land came into force in the State in 2010 and has since been revised five times, so that the present figure is 220 per cent of the value fixed in 2010.
So for most Kerala property there is no stamp duty value as on 1 April 2001 for the cap in section 90(10) to fasten on. The value has to be built from evidence instead.
What does not work is taking today's fair value and working backwards by the revision percentages. The 2010 figure was the first one fixed; it was not a restatement of a 2001 value, and the revisions since are flat percentage increases across the board, not a record of how any particular property moved.
A value as on 1 April 2001 stands or falls on the instances behind it. The report should carry certified copies of registered sale deeds of comparable land in the same village or adjoining village, registered in or about 2000 and 2001, obtained from the Sub Registrar's office.
Each instance is then adjusted for the things that differ — extent, shape, frontage, width of the access road, distance from the road and from the nearest town, level relative to the road, and the gap in time between that sale and 1 April 2001.
For a building, the land value is arrived at as above and the building is valued separately on its cost of construction as on that date, less depreciation for its age and condition.
Records of that period are largely not digitised in Kerala. An index search and certified copies at the Sub Registry take time, which is why this work cannot be done overnight.
The 1 April 2001 value and the tax rate are two separate questions. Substituting the 1 April 2001 value under section 90(9)(b) remains available. How that value is then treated in computing the gain changed for transfers on or after 23 July 2024, and for resident individuals and Hindu undivided families there is a transitional provision for property acquired before that date. The tax computation is for your chartered accountant. What this report fixes is the value.
This works out the indexed cost of acquisition only, on the cost inflation index notified under section 72(8)(a) with 2001-02 as the base year. It is arithmetic, not advice, and it does not decide how the gain is taxed — see the note above on transfers from 23 July 2024.
I write these reports for property across Kozhikode (Calicut), Malappuram, Kannur and Wayanad, and take instructions by email from owners living abroad.