Capital Value System

Objective

The objective of this document is to compare the capital value method of property tax assessment with other available methods i.e. annual rental value and unit area value method and evolve the approach to incorporate the capital value system in DIGIT with bare minimum changes.

Source of Information

Uttarakhand - Draft for capital value system, IGRS system study.

Andhra Pradesh - Draft for capital value system, IGRS system study.

Abbreviation

Acronym

Value

ARVM

Annual Rental Value Method

UAVM

Unit Area Value Method

CVM

Capital Value Method

IGRS

Inspector General of Registration and Stamps

Capital Value

Process Overview

The process of assessment of property tax will remain the same as the UAV method for assessment of property tax.

Methods of property tax assessment

There are broadly 3 methods which are being used for property tax assessment.

Annual Rental Value - In this method tax is calculated on the annual rental value.
Unit Area Value - In this method tax is calculated on annual value.
Capital Value - In this method tax is calculated on capital value.

DIGIT already supports the first 2 methods of property tax assessment while the capital value method is relatively new and needs to be incorporated into DIGIT. DIGIT to provide the configuration to define the method of assessment of property tax upfront.

Masters Data

State Level Masters

DIGIT already supports masters which are required to calculate the annual rental/ annual value. Below given table illustrates which of those are relevant for the capital value method.

ARVM/UAVM

CVM

Comments

Property Type

It is to define the structure of property as a property would be a vacant land, or a building.

Property Usage

It is upto 3 levels of categorization of usage of a property.

Floors

It is to define the floors e.g. Ground Floor, First Floor etc.

Occupancy

Not Applicable

Occupancy defines whether a property is occupied by the owner itself or rented out to a tenant.

Ownership Type

It is upto 2 levels of categorization of ownership of a property.

Owner’s Category

It is a category of owner based on which owner would be eligible for certain exemption on property tax. E.g. Freedom Fighter, Army Personal etc.

Construction Type

It is to define the consumption category of a building. A building would be a Pakka, Kachha or Semi Pakka etc.

Not Applicable

Distance From Road

Distance of the building from the main road plays the role to calculate the capital value. It is applicable to vacant land properties only.

ULB Specific Masters

Boundaries

ULBs are divided into definite smaller units of boundaries to define the unit/ rental rates. In the same way, boundaries are defined by the registration and stamp duty department to define the circle rates. DIGIT has to provide the option to define the boundaries from the registration and stamp duty department.

District → SRO → Block or Segment

ARVM/UAVM

CVM

Comments

ULB

It is to define the ULB with all its attributes like District, Address, Grade etc.

Ward

Not Applicable

All the ULBs in the state have only one boundary hierarchy i.e. Admin Boundary which is used for both Revenue and Administration purposes. Ward is the smallest boundary in this hierarchy and placed at second level just below the ULB boundary itself.

Locality

Not Applicable

Locality or Mohalla is the smallest boudry unit within the ULB which defines the state of the bounded area. So a locality would be specified as posh, modest, slum etc. and the rares are defined accordingly. Rental and Unit Area rates are defined based on the locality.

Not Applicable

SRO

Name of sub registrar office within the given district. For smaller cities there is only one SRO.

Not Applicable

Segment/ Block

Localities are further segmented into multiple blocks to define the circle rates.

Cross Boundaries Mapping

ULB - SRO mapping - It is mandatory to have and list the SROs on the screen linked with a ULB.
Locality - Segment/ Block mapping - It is nice to have, but not mandatory. Having this mapping will make the segment/ block list refined to be selected by the applicant.

Fee, Rates, Penalty and Rebates

ARVM/UAVM

CVM

Comments

Rental Rates

Not Applicable

Rental rates are generally defined based on the locality, usage, and the construction type of the property.

Unit Rates

Not Applicable

Rental rates are generally defined based on the locality, usage, and the construction type of the property.

Not Applicable

Circle Rates

Circle rates are generally defined based on the Segment or Block, Usage, Property Type, Construction Type, and Distance of property from the road.

Tax Rates

Penal Interest

Penalties

Rebates

Property Attributes

Below given table lists all the fields/attributes which are captured to record the property detail and use for various purposes like assessing the property tax using the current capital value of the property, generating the demand bills, locating the property, and sending the notification to owners of property etc.

Location Details

ARV and UAV-specific boundaries are not applicable for the calculation of capital value. CVS has a completely different set of boundaries used by the registration and stamp duty department to define the circle rates and the same is given below. SRO and Block are to be added to the location detail of the property to enable CVM.

Field Name

Field Type

Is Mandatory

Comments

Pincode

Textbox

Pincode of the locality property belongs to. Though it is non-mandatory.

Locality

Dropdown

Yes

Locality to which property belongs to. It is internally mapped to ward and ULB boundary.

Street Name

Textbox

Street name on which property is situated.

Door No.

Textbox

Yes

It is mandatory for Buildings and Flats

SRO

Dropdown

Yes

SRO will be populated based on the district of ULB.

Block/ Segment

Dropdown

Yes

It is a non-editable field. It is populated on SRO selected and cross hierarchy mapping if it exists.

Construction Details

In the construction detail, occupancy of the property is irrelevant for the calculation of the property’s capital value while other masters like property type, usage, nature of business, and the construction type are used as it is. However, there would be changes in that the values are a little bit different and defined according to the registration and stamp duty department.

Ownership Details

No change is required in existing ownership details.

Required Documents

Documents which are required to avail of the service are already configurable.

Property

Property Registration From (UI)

UOM, Rules & Calculations

Unit of Measurement

This needs to be configurable, configured with the start of using the product and can not be changed once the product is live and in use.

Calculation of Depreciation

It is @1% for every completed year after 10 years up to a maximum of 70%. Up to 10 years of building age depreciation are not provided. For the capital value of land, no depreciation is applicable.

Calculation of Capital Value

To calculate the capital value of a building which is not a flat in the apartment, the capital value of the constructed area and land on which the building is constructed are calculated separately and then added up to arrive at the property's capital value. The capital value is calculated floor-wise.

Capital Value (Vacant Land) = Area of vacant land * circle rate defined for vacant land;
Capital Value (Individual Building) = Land Capital Value + Builtup area of building * circle rate defined for the building;

The capital value for the apartment is calculated on the super built-up area of the flat. In this case, land capital value is not added to flat capital value.

Capital Value (Flat In Apartment) = Super built-up area of flat * circle rate defined for the building;
Calculation of Property Tax - Property Tax = Capital Value * Tax Rates;

Integration Approach

No Integration

In this approach capital value calculation logic, circle rates and associated masters are maintained in DIGIT itself and any change/ revision in respect of calculation logic, and rates are done at IGRS system, which is manually done in DIGIT.

Masters are maintained in DIGIT.
Circle rates are maintained in DIGIT and get updated when required.
Capital value calculation logic is maintained in DIGIT along with depreciation calculation.
Any change in rate and calculation logic needs a change in DIGIT in terms of configuration/ customization.

Capital Rate API Integration

In this approach, circle rates are maintained in the IGRS system. While capital value calculation logic and the masters are maintained DIGIT. The API is called to fetch the circle rates from the IGRS system.

Masters are maintained in DIGIT in such a way that values can easily be associated with the master values maintained at the IGRS system.
Circle rates are maintained only at the IGRS system and fetched by DIGIT on the fly. It avoids the need to manually maintain the rates in DIGIT.
Capital value calculation logic is maintained in DIGIT along with depreciation calculation, hence a change in capital value calculation needs a change in DIGIT.

Capital Value API Integration

In this approach capital value calculation logic rates are maintained in the IGRS system. While only associated masters are maintained in DIGIT. API is called to fetch the capital value from the IGRS system by passing appropriate values.

Masters are maintained in DIGIT in such a way that values can easily be associated with the master values maintained at the IGRS system.
Circle rates are maintained only at the IGRS system.
Capital value calculation logic is also maintained in the IGRS system only.
DIGIT performs the API call to fetch the capital value from the IGRS system by passing all required data to IGRS.
This approach avoids the need to maintain rates and calculation logic in DIGIT. Hence any change in rate and capital value calculation will require a change in DIGIT.

Use cases - Capital Value Calculation

Suppose circle rates are defined as given below.

Type

Usage 1

Construction

Usage 2

Rate

Individual

Residential

Pakka

12000

Individual

Residential

Kachcha

10000

Individual

Non-residential

Shop/ Restaurant/ Office

64000

Individual

Non-residential

Others

58000

Flat

30000

Plot

16000

** Rates are defined per Sq. Mt.

Vacant Land

Suppose there is an open plot with an area of 167 sq. mt. Then the capital value calculated will be.

Capital Value = 167 * 16000 = 26,72,000;

Individual Building (Residential)

The age of the building is less than 10 Years.

Plot Area = 1000 sq. mt.
Built-up Area = 800 sq. mt.
Usage = Pakka

The calculation of capital value will be as illustrated below.

Capital value for land = 1000 * 16000 = 1,60,00,000;
Capital value for construction = 800 * 12000 = 96,00,000;
Capital Value of Property = 1,60,00,000 + 96,00,000 = 25,600,000;

The age of the building is less than 21 Years.

Plot Area = 1000 sq. mt.
Built-up Area = 800 sq. mt.
Usage = Pakka

The calculation of capital value will be as illustrated below.

Capital value for land = 1000 * 16000 = 1,60,00,000;
Capital value for construction = 800 * 12000 = 96,00,000;
Depreciated capital value of construction = 96,00,000 - 96,00,000*11/100 = 85,44,000;
Capital Value of Property = 1,60,00,000 + 85,44,400 = 24,544,000;

Individual Building (Non-residential)

Plot Area = 1000 sq. mt.
Built-up Area = 800 sq. mt.
Usage = Shop/ Restaurant/ Office

The calculation of capital value will be as illustrated below.

Capital value for land = 1000 * 16000 = 1,60,00,000;
Capital value for construction = 800 * 64000 = 5,12,00,000;
Capital Value of Property = 1,60,00,000 + 5,12,00,000 = 52,80,03,200;

Flat In an Apartment

Super built-up area = 139.355 sq. Mt.
Capital value = 139.355 * 30000 = 41,80,650;

System Studies

IGRS UTTARAKHAND

Screenshots

Masters Data Relationship

Property Type

Property Type (Hindi)

Usage

Nature Of Business

Construction Type

Distance From Road

Forming Land

कृषि भूमि

Vacant Land

(Land area In Sq. Mt.)

अकृषि भूमि

0 से 50 मीटर तक

51 से 350 मीटर तक

350 मीटर से अधिक

0-50 मीटर

51 से 200 मीटर तक

200 मीटर से अधिक

0 से 200 मीटर तक

Flat in apartment

(Super builtup area In Sq. Mt.)

बहुमंजलीय आवासीय भवन में स्थित आवासीय फ्लैट

Residential

Individual building

(Builtup area in Sq. Mt.)

वाण्ज्यििक भवन/ गैर वाण्ज्यििक भवन

Residential

प्रथम श्रेणी (लिन्टरपोष)/ (पक्का )

द्वितीय श्रेणी (टीनपोश)/ (सेमी पक्का/ कच्चा)

Non-residential

दुकान/रेस्टेरेन्ट/कार्यालय

अन्य वाण्ज्यििक प्रतिष्ठान

Data Elements To Calculate CV

Boundaries (IGRS Boundary Hierarchy)

District
SRO
Location Area
Village/ Mauza

Property Level

Property Type
Property Sub-type
Usage - AP classifies open plots also into residential and non-residential categories.

Floor Level

Floor Type
Sub-usage - Applicable only to commercial properties.
Construction Type - It is termed as construction type as well.
Construction Year - It is calculated from the date of construction.
Area - In some other places it is the built-up area/ super built-up area considered for calculation.

There are 2 masters from IGRS values which covers Property Type, Usage, Sub-usage, and Construction Type. It also consists of the distance of the property from the road which is currently not available in the DIGIT. Hence the option to establish the mapping between IGRS and DIGIT masters is to be provided.

Area Major Class
Area Class

IGRS Andhra Pradesh

Screenshots

Master Data Relationship

Property Type

Usage (Applicable all other than Forming Land)

Construction Type (Applicable to all irrespective of residential or non-residential)

Forming Land

Vacant Land

Residential

RCC

Non-residential

Mud Roof

Flat in apartment

Residential

Roof with palm/grass etc. with brick wall

Non-residential

Roof with palm/grass etc. without brick wall

Individual building

Residential

ACC/M. T/ Pan Tile/ Shabad Stone/Zn Sheet

Non-residential

ACC/TIN/Zn Sheet etc. with walls above 10 ft.

Poultry Form

Apartment without common walls at least 3 sides

Data Elements To Calculate CV

Boundaries (IGRS Boundary Hierarchy)

District
SRO
Village
Habitation/Locality
Ward
Block
Door No.

Property Level

Property Type
Property Sub-type
Usage - AP classifies open plots also into residential and non-residential categories.

Floor Level

Floor No.
Structure Type - It is termed a construction type as well.
Plinth Area - In some other places it is the built-up area/ super built-up area considered for calculation.
Stage of construction - ULBs assess the completed properties only. Under-construction properties are considered for property tax assessment.
Age of building - It is calculated from the date of construction.

Open Questions

Is it possible to categorize the SROs into URBAN and RURAL? As we are interested in urban areas only.

UKD: SROs follow different hierarchies - decided based on tehsil boundary. cannot be categorised as purely urban or rural, can be mixed

AP: SROs have their own jurisdiction which is independent of the ULB. Typically SRO has Urban and Rural areas under its jurisdiction. Some ULBs have more than one SRO. In AP, NIC is the solution provider for IGRS. NIC has shared the Capital Rates data with CDMA. ULBs are asked to share the SRO Codes which fall under their jurisdiction. So, relevant data is pushed to the respective masters of the ULB. Provision was enabled to disable those Areas which doesn't fall under the ULB.

To calculate the capital value, is it necessary to have the deed type and deed sub-type or these are needed only to calculate stamp duty?

UKD: yes, these details are required.

AP: To calculate Capital Value, Deed Type and Sub-type is not required. Provision is enabled to capture Deep Type at the time of applying for New Assessment and Title Transfer.

What are the cases where the distance of the property from the road is needed?

UKD: in all cases, the circle rate is calculated based on this

AP: This is not a criterion in AP - might be specific to UKD.

Is it necessary to capture the property detail floor-wise to calculate the capital value? If not, then what is the role of the floor in capital value calculation?

UKD: since earlier, they have floor-based calculation, recommended to keep floor details even though it is not being used in CV calculation. also for subsequently constructed floors, the cost of construction will be different

AP: Yes – floor details need to be captured as:

depreciation is given based on the year of construction. There might be cases where all floors are not constructed at the same time.
usage [Residence/ Non-Residence] might be different for each floor.

In capital value calculation, what is the role of the land area on which a building is constructed?

UKD: land area does not impact CV

AP: Capital Value is calculated in 2 different ways for buildings:

For Apartments, Floorwise Composite Rate is defined for the specific Door No. is considered. In this case, Land Value is not considered.
For Non-Apartment, Structure Value based on the type of construction is considered for the calculation of Structure Capital Value [SCV]. The piece of Land that is used to construct the Structure is used to calculate Land Capital Value [LCV]. SCV + LCV is the total Capital Value of the Property.

Are the capital value of land and the building both calculated and then summed up to arrive at the capital value of the built-up structure?

UKD: yes land and building CV are calculated separately and then added.

AP: Yes – Land Value and Structure Value are calculated separately and summed up for Non-Apartments.

What is the Village/ Mauza and how is it different from the Area of land?

UKD: this is based on tehsil revenue records/maps. not used for the calculation of CV but important in MIS

AP: Not familiar with this terminology – might be specific to UKD.

What is the role of the construction year in capital value calculation?

UKD: this is considered in calculating depreciation

AP: Construction Date is required to calculate Depreciation.

What type of rebate is provided, is it applicable to the calculation of capital value or stamp duty or both?

UKD: not decided yet but needs to be kept configurable. early payment + one configurable (based on ULB) are recommended heads.

AP: There is no rebate given at the time of calculation of Capital Value.

What is the role of the age of the building in capital value calculation?

UKD: based on the year of construction. recommended keeping the year of construction rather than this

AP: Age is dependent on the Date of Construction of the floor which is required for the calculation of Depreciation.

It looks like Distance from road values is not common across the ULBs. Are the SROs following different values? Please see the table below for more details.

UKD: this will be decided by the Revenue Dept / SRO. ULBs will not have a say also, this needs to be maintained as part of the master data setup.

AP: This might be specific to UKD.

IGRS - Boundaries (Uttarakhand)

Districts

dcode

dname

dname_eng

census_code

distict_order

DISTRICT MASTER

अल्मोडा

ALMORA

बागेश्वर

BAGESWAR

चम्पावत

CHAMPAWAT

देहरादून

DEHRADUN

पौडी गढ़वाल

PAURI GARHWAL

चमोली

CHAMOLI

हरिद्वार

HARIDWAR

नैनीताल

NAINITAL

टिहरी गढ़वाल

TEHRI GARHWAL

पिथौरागढ़

PITHORAGARH

रुद्रप्रयाग

RUDRAPRAYAG

उधम सिंह नगर

UDHAM SINGH NAGAR

उत्तरकाशी

UTTARKASHI

Sub-registrar Office (SRO)

dcode

srocode

sroname

sroname_eng

Sub Registrar Office Master

अल्मोडा

ALMORA

भिकियासैण

BHIKIYASEN

रानीखेत

RANIKHET

बागेश्वर

BAGESWAR

कपकोट

KAPKOT

कैम्प कार्यालय टनकपुर ,चम्पावत

CHWAT

चम्पावत

CHAMPAWAT

डिस्ट्रिक्ट रजिस्ट्रार, देहारादून

DISTRICT REGISTRAR, DEHRADUN

देहरादून,प्रथम

DEHRADUN-I

देहरादून,द्वितीय

DEHRADUN-II

देहरादून,तृतीय

DEHRADUN-III

देहरादून,चतु्र्थ

DEHRADUN-IV

ऋषिकेश

RISHIKESH

विकासनगर ,प्रथम

VIKASNAGAR-I

विकासनगर द्वितीय

VIKASNAGAR-II

चकराता

CHAKRATA

मसूरी कैम्प कार्यालय

MUSSOORIE

त्यणी

TYUNI

कालसी

KALSI

देहरादून तृतीय 1995-1999

DEHRADUN-III 1995-1999

देहरादून

Dehradun

विकासनगर

Vikasnagar

कैम्प कार्यालय यमकेश्वर, कोटद्वार

KOTDWAR

कोटद्वार

KOTDWAR

लेन्सडौन

LANSDOWNE

पौड़ी

PAURI

श्रीनगर

SRINAGAR

चमोली

CHAMOLI

जोशीमठ

JOSHIMATH

कर्णप्रयाग

KARNPRAYAG

थराली

THARALI

हरिद्वार,प्रथम

HARIDWAR-I

हरिद्वार,द्वितीय

HARIDWAR-II

लकसर

LAKSAR

रुड़की,प्रथम

ROORKEE-I

रुड़की,द्वितीय

ROORKEE-II

रुड़की,तृतीय

ROORKEE-III

हरिद्वार

Haridwar

रुड़की

Roorkee

कैम्प कार्यालय कालाढूंगी ,

हल्द्वानी,द्वितीय

कैम्प कार्यालय कालाढूंगी ,हल्द्वानी,प्रथम

HALDWANI-I

हल्द्वानी,द्वितीय

HALDWANI-II

नैनीताल

NAINITAL

रामनगर

RAMNAGAR

धारी

DHARI

हल्द्वानी

Haldwani

देवप्रयाग

DEVPRAYAG

घनसाली

GHANSALI

जाखणीधार

JAKHNIDHAR