Valuation services for its business premises

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Marimuthu (Querist)
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19 January 2024 Dear Experts,
1 A company is availing the valuation services for its business premises from a registered Chartered Engineer
2 What would be the GST implications on its service
3 The service provider does not registered under GST

RAJA P M

RAJA P M (Expert)
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19 January 2024 GST not applicable for the said service...

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RAJA P M

RAJA P M (Expert)
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19 January 2024 Please put (.) pull stop in closed sentences...

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Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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17 August 2025 1. Core Valuation Approaches
a) Market Approach (Sales Comparison)
Values the property by comparing it to recent sales of similar premises in the area—adjusting for factors like location, size, age, facilities, etc.
Ideal when reliable recent market data is available.
Wikipedia
+1
b) Income Approach (Capitalisation / Discounted Cash Flow)
Calculates value based on the income the property generates.
Methods include:
Direct Capitalisation: Value = Net Operating Income ÷ Capitalisation Rate.
Discounted Cash Flow (DCF): Projects future rent streams and discounts them to present value.
Especially suitable for income-generating commercial premises.
Wikipedia
+1
c) Cost Approach (Replacement Cost)
Values property based on land value plus construction cost minus depreciation (physical, functional, or economic).
Most reliable for newer or special-use properties where market data is limited.
Investopedia
Wikipedia
+1
2. Choosing the Right Approach
Combine methods where helpful: e.g., for older premises, a weighted blend of market and income approaches may yield the most accurate reflection.
Preference depends on context:
Market approach: Best if similar properties are recently transacted.
Income approach: Use when the premise generates rental income.
Cost approach: Use for new constructions or unique custom properties lacking comparables.
Supported by ICAI Valuation Standard 103, these three approaches are the recognized foundation for robust and consistent valuation outcomes.
BCAJ
3. Regulatory & Reporting Standards
Engage a Registered Valuer under the Companies Act when valuation is for legal compliance or financial reporting.
Financial valuation (e.g., shares, goodwill) requires a CA, CMA, or CS with 5 years’ experience.
Technical valuation (e.g., immovable property) requires a licensed engineer or architect.
CAclubindia
Ensure the engagement letter and valuation report align with ICAI or International Valuation Standards (IVS)—defining scope, bases of value, assumptions, and methods used.

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