When reviewing an Encumbrance Certificate (EC), you will often come across two important terms, Market Value and Consideration Value.
MARKET VALUE
The Market Value is the government-determined value of the property, also referred to as the Guidance Value or Circle Rate.
- It represents the minimum value at which a property can be registered in a specific locality.
- This ensures that the minimum stamp duty payable to the government is safeguarded.
- The Market Value is fixed by the Department of Stamps & Registration for each area.
IMPORTANT NOTE:
While you may sell or purchase a property for less than the government’s market value, stamp duty cannot be paid on an amount lower than the market value.
CONSIDERATION VALUE
The Consideration Value is the actual sale price agreed upon between the buyer and seller. This amount can be higher or lower than the market value, but the stamp duty will always be calculated based on the higher of the two.
Example from an EC:
In the sample EC shown below:
- The Market Value is highlighted with a black circle.
- The Consideration Value is highlighted with a blue circle.
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FAQs
- What is Market Value in an Encumbrance Certificate?
The Market Value in an EC is the government-assigned minimum value of a property, also known as the guidance value or circle rate. It determines the minimum stamp duty payable during registration. - Can a property be sold below market value?
Yes, a property can be sold below market value, but the stamp duty will still be calculated on the market value set by the government, not the lower sale price. - What is Consideration Value in an EC?
The Consideration Value is the actual sale price agreed between the buyer and seller. It can be higher or lower than the market value, but stamp duty will be calculated on whichever is higher. - Who determines the Market Value of a property?
The Market Value is determined and periodically updated by the Department of Stamps & Registration in the respective state or locality. - Why is it important to know both Market Value and Consideration Value?
Knowing both helps in understanding the stamp duty payable, verifying transaction records, and ensuring there are no discrepancies during property registration or legal verification.