Registration of valuers.

514(1)

The Principal Chief Commissioner or Chief Commissioner, or the Principal Director General or Director General, shall maintain a register of valuers in which the names and addresses of persons registered under sub-section (2) shall be entered.

514(2)

Any person, possessing such qualification for valuing such class of assets, may apply to the Principal Chief Commissioner or Chief Commissioner, or the Principal Director General or Director General, for getting registered as a valuer, in such form, verified in such manner and accompanied by such fee, as prescribed, along with a declaration stating that the applicant will––

• (a) conduct an impartial and true valuation of any asset required to be valued;
• (b) furnish a valuation report in the prescribed form;
• (c) charge fees not exceeding the prescribed rate or rates; and
• (d) refrain from undertaking the valuation of any asset in which such person has a direct or indirect interest.

514(3)

The valuation report prepared by a registered valuer for any asset shall be in such form and verified in such manner, as prescribed.

Explanation

Section Summary:

Section 514 of the new income tax law establishes a framework for the registration and regulation of valuers in India. It mandates the maintenance of a register of valuers by the Principal Chief Commissioner or Chief Commissioner, or the Principal Director General or Director General. The section outlines the qualifications, application process, and ethical obligations for individuals seeking to become registered valuers. It also specifies the format and verification process for valuation reports prepared by registered valuers.

Key Changes:

1. Introduction of a Formal Register of Valuers: Unlike the previous system, which lacked a centralized register, this section introduces a formalized process for maintaining a list of registered valuers.
2. Standardized Application Process: The section prescribes a structured application process, including specific qualifications, forms, fees, and a declaration of ethical conduct.
3. Ethical Obligations: Registered valuers are now explicitly required to adhere to ethical standards, such as impartiality, proper reporting, and avoiding conflicts of interest.
4. Prescribed Valuation Report Format: The section mandates that valuation reports must follow a prescribed format and verification process, ensuring consistency and reliability.

Practical Implications:

• For Valuers: Individuals seeking to become registered valuers must meet specific qualifications, submit an application with the required fee, and adhere to ethical guidelines. This formalizes their role and ensures accountability.
• For Taxpayers and Businesses: Taxpayers and businesses relying on valuation reports (e.g., for property, shares, or other assets) can now expect standardized and impartial reports from registered valuers, reducing disputes and ensuring compliance.
• For Tax Authorities: The centralized register and standardized processes will streamline oversight and improve the reliability of valuation reports used in tax assessments.

Critical Concepts:

• Registered Valuer: A person qualified to value specific classes of assets and registered under this section.
• Valuation Report: A document prepared by a registered valuer, detailing the value of an asset in a prescribed format.
• Conflict of Interest: A situation where a valuer has a direct or indirect interest in the asset being valued, which could compromise impartiality.

Compliance Steps:

1. For Aspiring Valuers:
   • Ensure you possess the required qualifications for valuing specific asset classes.
   • Submit an application in the prescribed form, along with the required fee and a declaration of ethical conduct.
2. For Registered Valuers:
   • Conduct valuations impartially and without conflicts of interest.
   • Prepare valuation reports in the prescribed format and ensure proper verification.
   • Charge fees within the prescribed limits.
3. For Taxpayers and Businesses:
   • Engage only registered valuers for asset valuations required for tax purposes.
   • Ensure valuation reports comply with the prescribed format and are verified as required.

Examples:

• Scenario 1: A business needs to value its machinery for tax purposes. It hires a registered valuer who prepares a valuation report in the prescribed format, ensuring compliance with Section 514.
• Scenario 2: An individual applies to become a registered valuer for real estate. They submit the required application, fee, and declaration, and upon approval, their name is added to the register of valuers. They are now authorized to provide valuation reports for real estate assets.

This section enhances transparency and reliability in the valuation process, benefiting all stakeholders involved in tax-related valuations.