Property / Real Estate Valuation

Valuation of real estate or property for a purpose recognised under company law is governed by section 247 of the Companies Act, 2013, read with the Companies (Registered Valuers and Valuation) Rules, 2017.

Section 247(1) requires that where a valuation is required under the Act — for example, of a company's immovable property forming part of a merger/scheme of arrangement, a related-party transaction, or a non-cash consideration for shares — it must be conducted by a person registered as a Registered Valuer, in the manner prescribed by the 2017 Rules. This has been mandatory since 31 January 2019, and for immovable property such a valuer must be registered with the Insolvency and Bankruptcy Board of India (IBBI) under the "Land and Building" asset class.

Section 247(2) requires the Registered Valuer to act with due diligence, impartiality, and to disclose any conflict of interest in relation to the property or the parties involved; section 247(3) prescribes penal consequences, including a fine and, where there is fraudulent intent, imprisonment, for contravention of the section or the rules.

Property valuations may also be required for purposes outside the Companies Act — such as bank/NBFC loan security, stamp duty assessment, or income-tax purposes under the Income-tax Act, 1961 — each of which may prescribe its own valuer-eligibility or reporting-format requirements; the applicable framework is confirmed against the specific end-use before the report is issued.

This service covers valuation of land, buildings, and other immovable property using recognised approaches (comparable sales, income capitalisation, or depreciated replacement cost as appropriate), issued through the Registered Valuer framework where the valuation is intended to support a Companies Act purpose.

Property valuation is the determination of the fair market value of land, buildings and real estate assets for the legal, the financial and the regulatory purposes — the valuation for the sale and the acquisition, the lending and the hypothecation, the income tax under Section 50C of the Income-tax Act 1961 where the stamp duty value is compared with the consideration, the capital gains computations, the stamp duty and the registration, and the statutory valuations for the companies under the Companies Act 2013. The valuation is the chartered accountant's or the registered valuer's reasoned opinion of the value, built on the market evidence and the valuation methods.

The property's value is the number that the transactions, the lending and the tax are built on, and the valuation is the discipline that produces it — the comparable sales, the income approach and the cost approach, adjusted for the location, the condition and the market. The valuation is used where the value must be defensible: the stamp duty authority tests it against its own circle rates, the bank tests it against the lending norms, and the tax authority tests it under Section 50C.

The cost of a wrong valuation is the wrong transaction and the wrong tax: the property bought or sold at the value that was never tested, the loan sanctioned on the inflated value, the capital gains computed on the understated value and the scrutiny that follows.

This service is for owners, buyers, lenders and the courts needing property valuations. We inspect the property and the records, gather the market evidence, value the property by the appropriate methods — the comparable, the income and the cost — document the valuation with the basis and the assumptions, and certify the value for the transaction, the lending, the tax and the regulatory purpose it serves.