Outdated collector rates fuel real estate deals in cash

The decision of the state government to increase stamp duty on land transactions without revising outdated collector rates is proving counterproductive and financially damaging, according to residents and officials.

A significant gap persists between the official collector rates and the prevailing market prices in several parts of the state. In some cases, land with a collector rate of Rs 10 lakh per kanal is being sold in the open market for Rs 50 lakh per kanal.

The disparity is resulting in substantial revenue losses to the state exchequer and encouraging large-scale cash transactions. As stamp duty is calculated on the officially-recorded value, buyers and sellers often register property at the lower collector rate, while the remaining amount is allegedly exchanged in cash.

Critics say that the system indirectly promotes black money, tax evasion and unaccounted financial dealings. Instead of curbing irregularities, they argue, the current policy framework is inadvertently enabling them.

Subhash Sharma, a member of local NGO People’s Voice, says that merely increasing the stamp duty does not guarantee higher revenue to the government. Without realistic and periodic revision of the collector rates in line with the market prices, the government will continue to lose substantial income while parallel cash transactions flourish, he adds.

A senior state government officer told The Tribune that several Deputy Commissioners had recommended the revision of the collector rates but the state government had not taken the matter seriously. He added that there was an urgent need to enhance the circle rates, as the government was losing revenue to the tune of crores of rupees every month.

“At a time when Himachal Pradesh is facing fiscal stress, the need of the hour is transparent valuation, rational revision of the land rates and strict enforcement to ensure property transactions reflect their true market value. Only then the state will be able to plug revenue leakages and curb the growing menace of black money in real estate dealings,” says social activist BK Sood.