Written for the Income-tax Act, 2025, in force from 1 April 2026
Rabish Ammathur — Registered Valuer, Land and Building — Kozhikode (Calicut), Kerala
If you are a non-resident selling inherited land or a house in Kerala, you will need a report from a registered valuer stating the property's fair market value as on 1 April 2001. That figure becomes your cost of acquisition. A non-resident cannot use indexation, so the 2001 value is the one lever left for reducing a long-term capital gain on old family property, and it has to exist before the buyer pays you, not after.
When you sell inherited property, your cost of acquisition is whatever the previous owner paid, and their holding period counts as yours. Most family property in Kerala was acquired long before 2001, often for a few thousand rupees. The law lets you replace that old cost with the property's fair market value on 1 April 2001, at your option.
A resident seller who bought before 23 July 2024 has a second option, tax with indexation, if that works out lower. That option is not available to a non-resident. So for you the 2001 valuation is not one of several levers. It is the lever.
Every rupee of properly evidenced 2001 value is a rupee off the taxable gain. Without a valuation, the cost is the original purchase price in 1975 or 1985 rupees, and almost the whole sale price is treated as gain.
When the seller is a non-resident, the buyer must deduct tax on the entire sale consideration, not on the gain, and pay it to the government before paying you. Depending on the amount, that is roughly 13 to 15 per cent of the price. The 1 per cent rate that applies to resident sellers does not apply to you.
There are two ways to deal with this.
The order, therefore, is: valuation report, then the CA's computation, then the certificate, then the sale deed and payment. Start two to three months before you expect the buyer to pay.
An illustration with rounded figures, assuming no other Indian income. The 2001 value is an assumed figure; your CA computes the exact tax.
Your father bought a house plot in 1982 for Rs 40,000. You inherited it in 2019 and sell it in 2026 for Rs 1 crore. A registered valuer establishes its fair market value on 1 April 2001 at Rs 22 lakh.
Tax deducted by the buyer if no certificate is obtained: about Rs 14.3 lakh on the full Rs 1 crore, whichever column applies. With the certificate, about Rs 11.2 lakh.
In this example the valuation takes about Rs 3 lakh off the tax, and the certificate stops another Rs 3 lakh from being withheld and refunded a year later. The higher the property's 2001 value relative to today's price, the larger both numbers get.
The Act caps the 2001 fair market value of land or a building at the stamp duty value as on 1 April 2001, "wherever available". Kerala's statutory fair value of land came into force only in 2010. For most Kerala property there is no 2001 stamp duty value, so the cap does not bite.
That cuts both ways. The report rests entirely on evidence: registered sale instances of the period from the Sub Registrar's records, and the depreciated cost of any building as it stood in 2001. The Assessing Officer can refer the valuation to a Valuation Officer, and a figure without evidence does not survive that. This is why the report has to be done properly rather than quickly.
You get the report as a PDF for you and your CA, and the signed original by courier. Turnaround is agreed when you instruct me.
One thing I will tell you before starting: if the previous owner acquired the property after 1 April 2001, a 2001 valuation is not the right tool. Their actual cost applies, and you should not pay for a report you cannot use.
These are your CA's and advocate's work, listed so you can plan around them.
Two cautions. If the property is agricultural land or plantation, you may inherit and sell it as a non-resident, but only to a resident Indian. And if the sale price is below the Kerala fair value by more than 10 per cent, the fair value is treated as your sale price for tax; your advocate and CA will check this before the agreement is signed.
Do I have to come to Kerala for the valuation? No. The property must be inspected, so a relative or your power of attorney holder opens the gate. Documents can be sent as scans, the report goes to you and your CA as a PDF, and the signed original is couriered.
Can my chartered accountant do the 2001 valuation? No. The fair market value as on 1 April 2001 has to come from a registered valuer's report. Your CA uses that report to compute the gain, apply for the certificate and file your return.
I inherited the property after 2001. Do I still need a 2001 valuation? It depends on when the person you inherited from acquired it. If they acquired it before 1 April 2001, you may take the fair market value on that date, and that is what the valuation establishes. If after, their actual cost applies.
The buyer wants to pay next month. Is it too late? The valuation takes days; the certificate takes weeks. If payment cannot wait, the buyer deducts on the full price and you claim the excess through your return. The report is still needed for that return, so it is worth doing either way.
I write these reports for property across Kozhikode (Calicut), Malappuram, Kannur and Wayanad, and take instructions by email from owners living abroad. See also the page on fair market value as on 1 April 2001.