Rabish Ammathur
The Income-tax Act, 2025 (Act No. 30 of 2025) came into force on 1st April 2026 (s.1(3)), together with the Income-tax Rules, 2026. The Act works on the tax year, which is the twelve months of the financial year beginning on April 1 (s.3(1)). The tax year takes the place of the previous year and the assessment year of the 1961 Act. Income of the tax year 2026-27 and later years is computed under the 2025 Act. For any tax year beginning before April 1 2026, the Income-tax Act, 1961 continues to apply, and that includes notices, assessments, reassessments and appeals started on or after April 1 2026 for those years (s.536(2)(c)).
The sections below go through the events where a registered valuer's report is required as per the Income Tax Act 2025. The 1961 provision is given in brackets after the 2025 provision, where applicable.
Property held before 1st April 2001
Where land or a building became the assessee's property before April 1 2001, the cost of acquisition may be taken as the actual cost or the fair market value as on April 1 2001, at the assessee's option (s.90(9)(a); 1961: s.55(2)(b)(i)).
Where the property came to the assessee under a gift or will, by succession or inheritance, or by another mode listed in s.73 (Table: Sl. No. 1), and the previous owner held it before April 1 2001, the choice is between the previous owner's cost and the fair market value as on 1st April 2001 (s.90(9)(b); 1961: s.55(2)(b)(ii)).
For land or a building, the fair market value as on 1st April 2001 cannot exceed the stamp duty value of the property as on that date, wherever available (s.90(10); 1961: proviso to s.55(2)(b)).
If a registered valuer's report supports the value, that report is what the assessee relies on in the reference — the Valuation Officer has to hear him, and he can meet the officer's figure with a professional valuation of his own instead of a bare assertion s.91(1)(a) & s.91(1)(b).
Kerala property and the 1st of April 2001 value
Stamp duty value means the value adopted, assessed or assessable by the stamp authority, and "assessable" means the value the authority would have adopted or assessed if the property had been referred to it (s.2(105)). The cap in s.90(10) - the fair market value of land and building on the 1st April, 2001 for the cost of acquisition for calculating capital gains shall not exceed the stamp duty value, wherever available, of such asset as on the 1st April, 2001.
Section 28A of the Kerala Stamp Act, 1959 first provided for a "minimum value of land" (Act 14 of 1988). That provision was deleted by Act 16 of 1991. The Kerala Finance Act, 1994 (Act 19 of 1994) brought in "fair value of land" under s.28A from 1 April 1994. Statewide fair values were published by the notification in Kerala Gazette Extraordinary No. 515 dated 6 March 2010.
Sale below stamp duty value
Where land or a building is transferred for less than its stamp duty value, the stamp duty value is taken as the full value of consideration (s.78(1); 1961: s.50C). If the stamp duty value is not more than 110% of the consideration, the consideration is accepted (s.78(1)(b)). Where the agreement and the registration are on different dates and part or all of the consideration was received by specified banking or online mode on or before the agreement, the stamp duty value on the date of agreement may be taken (s.78(1)(a)).
If the seller claims that the stamp duty value exceeds the fair market value on the date of transfer, and the stamp duty value, in the words of s.78(2)(b), "has not been disputed in any appeal or revision or no reference has been made before any other authority, court or the High Court", the Assessing Officer may refer the valuation to a Valuation Officer (s.78(2)). A valuer's report on the fair market value as on the date of transfer is what supports that claim.
Land or a building that is not a capital asset sold below stamp duty value
Where land or a building that is not a capital asset, such as a builder's stock, is transferred for less than its stamp duty value, the stamp duty value is taken as the full value of consideration in computing the profits from that transfer (s.53(1); 1961: s.43CA). The 110% band applies here too (s.53(2)), as does the agreement-date rule (s.53(3) and (4)), and a reference to the Valuation Officer follows s.78(2)(3) (s.53(5)).
Buyer paying less than stamp duty value
Where a person receives land or a building for less than its stamp duty value, and the difference is more than ₹50,000 or 10% of the consideration, whichever is higher, the difference is taxed as income from other sources (s.92(2)(m)(ii); 1961: s.56(2)(x)). Property received without consideration is taxed at its stamp duty value where that value is more than ₹50,000.
These rules do not apply to receipts listed in s.92(3), which include receipts from a relative, on the occasion of the individual's marriage, and under a will or by way of inheritance (1961: proviso to s.56(2)(x)). If the buyer disputes the stamp duty value on the grounds in s.78(2), the Assessing Officer may refer the valuation to a Valuation Officer (s.92(4)(b)).
Assessing Officer's reference to the Valuation Officer
The Assessing Officer may refer the value of a capital asset to a Valuation Officer in two cases. Where the value claimed by the assessee is as per a registered valuer's estimate, the reference can be made if the Assessing Officer is of the opinion that the value is at variance with the fair market value (s.91(1)(a); 1961: s.55A(a)). In any other case, the reference can be made where the Assessing Officer is of the opinion that the fair market value exceeds the value claimed by more than 15% of that value or by more than ₹10 lakh (s.91(1)(b)(i); rule 55), or that the nature of the asset and other circumstances make it necessary (s.91(1)(b)(ii); 1961: s.55A(b)).
Cost of construction or investment questioned
For an assessment or reassessment, the Assessing Officer may make a reference to a Valuation Officer to estimate the value, including the fair market value, of any asset, property or investment (s.269(1); 1961: s.142A). The reference can be made whether or not the Assessing Officer is satisfied about the correctness or completeness of the accounts (s.269(2)). This is the route taken when the cost of construction shown for a house or building is doubted. The Valuation Officer's estimate is then the figure the assessee has to meet, and the answer to it is a valuation of the same construction with its quantities and rates set out.
Land converted into stock-in-trade
Where a capital asset is converted into, or treated by the owner as, stock-in-trade of his business, the profits are chargeable in the tax year in which that stock is sold or otherwise transferred, and the fair market value of the asset on the date of conversion is the full value of consideration (s.67(6); 1961: s.45(2)). A landowner who divides his land into plots or builds on it for sale needs the value as on the conversion date, which is often years before the sale. The capital gain is worked out on that value, and what the plots or units later fetch above it is business income.
Partner or member receiving property from a firm
Where a partner of a firm, or a member of an association of persons or body of individuals, receives a capital asset or stock-in-trade from it on its dissolution or reconstitution, the firm is deemed to have transferred the asset to the partner in the year of receipt, and the fair market value on the date of receipt is the full value of consideration (s.8; 1961: s.9B). Reconstitution includes a partner leaving or a new partner being admitted (s.8). Where money or a capital asset is received on reconstitution, the firm is also charged to capital gains on the money plus the fair market value of the asset, less the balance in the partner's capital account, that balance being taken without any credit from revaluation or self-generated goodwill (s.67(10); 1961: s.45(4)). Rule 50 attributes that gain to the assets left with the firm (1961: rule 8AB). The tax is on the firm, not the partner, and it is the firm's file that needs the value as on the date of receipt.
Joint development agreement
Where an individual or HUF transfers land or a building under a registered development agreement (a "specified agreement", s.67(15)(b)), the capital gain is taxed in the tax year in which the completion certificate for the whole or part of the project is issued. The full value of consideration is the stamp duty value of the owner's share in the project on the date the certificate is issued, plus any consideration received in cash, by cheque or draft, or in any other mode (s.67(14); 1961: s.45(5A)). If the land was held before 1 April 2001, its cost again depends on the 2001 value.
Sale by a non-resident
When the seller is a non-resident, the buyer must deduct tax on the sum chargeable to tax (s.393(2), Table: Sl. No. 17; 1961: s.195). Where the buyer considers that only part of the payment is chargeable in the seller's hands, the buyer can apply to the Assessing Officer in Form No. 129 to fix the part that is chargeable, and tax is then deducted only on that part (s.395(2); rule 214; 1961: s.195(2)).
The seller can apply for a certificate for deduction at a lower rate or no deduction in Form No. 128, which is filed electronically (s.395(1); rule 213; 1961: s.197). For either application, one of the things the Assessing Officer considers is the tax payable on the estimated income for the tax year (rule 213(3)(a); rule 214(3)(a)). That estimate depends on the cost of acquisition, including the 2001 value where it applies, and a valuer's report settling that cost is best obtained before either application is made.
Business buying land with a building
Depreciation is allowed on buildings, machinery, plant and furniture. Land is not in that list (s.33(1)(a); 1961: s.32). When a business buys land and a building together for one price, the price has to be split, and only the building part goes into the block of assets (s.2(17)). A valuer's report obtained at the time of purchase gives the basis for the split.
The report as evidence
A valuer's report is not filed with the return. A return goes in without any document attached (rule 164(11)). The report is produced when the Assessing Officer calls for it, in reply to a notice, or in a proceeding where the value is in question, and it is the assessee's evidence of value. In matters relating to the valuation of any asset, an assessee may attend before an income-tax authority or the Appellate Tribunal through a valuer registered under s.514, except where the assessee is required to attend personally for examination on oath or affirmation (s.513).
Continuity of registration. A valuer registered under the Wealth-tax Act, 1957 who held a valid certificate on 31 March 2026 continues to be a registered valuer under s.514, but has to update details by filing an application in Form No. 169, without any fee. The last date for that filing, first 30 September 2026, is now 31 March 2027 (rule 246(4), as amended by G.S.R. 822(E) dated 17 September 2026). On that filing, registration is to be granted if the application is complete in all respects (rule 246(4) and (5)).
Sources
Income-tax Act, 2025 (Act No. 30 of 2025), as amended by the Finance Act, 2026: sections 1(3), 2(17), 2(105), 3(1), 8, 33(1), 53, 67(6), (10), (14) and (15), 73, 78, 90(9) and (10), 91(1), 92(2)(m), 92(3), 92(4)(b), 269, 393(2), 395(1) and (2), 513, 514 and 536(2)(c). Income-tax Rules, 2026 (G.S.R. 198(E), 20 March 2026), with rule 246(4) as amended by the Income-tax (Fourth Amendment) Rules, 2026 (G.S.R. 822(E), 17 September 2026): rules 50, 55, 164(11), 213, 214, 246 and 247, and Forms No. 128, 129 and 169. Income-tax Act, 1961: sections 9B, 32, 43CA, 45(2), 45(4), 45(5A), 50C, 55(2)(b), 55A, 56(2)(x), 142A, 195 and 197, and rule 8AB of the Income-tax Rules, 1962. Kerala Stamp Act, 1959, section 28A. Kerala Gazette Extraordinary No. 515 dated 6 March 2010.
Law stated as on 18 September 2026.
The author is a income tax dept approved valuer (land and building) registered under Sec 34 AB of the Wealth Tax Act, practising in Calicut, Kerala
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