CONTENTS - Central Public Works Department

SECTION 4
(vi) Where the buildings or a part of the same as proposed to be hired have been acquired by the
owner as ready built property/space, in which the cost of purchase is inclusive of the cost of
land and thus represents the composite capital cost of the properties, the net value of the
property shall be worked out as follows:-
(a) If authenticated information is available regarding acquisition and purchase price of the readybuilt
property proposed to be hired, the same shall be considered as net value of the property
with due correction factor for appreciation/depreciation in its market value during the intervening
period, i.e from the date of its acquisition to the date of assessment.
(b) In case the information as above is not available, composite capital cost i.e. net value of the
property shall be worked out by comparing the same with the authenticated cost of similar
properties/space preferably of those acquired by Govt. departments (Central/State) or Public
Sector Undertakings (Central/State) in the vicinity or in the similar locality. If there are no such
properties available for comparison, cost of similar properties/space purchased by Public Sector
Banks/Private parties may also be considered for comparison subject to the condition that if
the sale/purchase of such properties was within the purview of Appropriate Authority, the cost
of acquisition shall be taken as what had been mentioned in the sale clearance issued by
Appropriate Authority. The cost as ascertained in these cases too shall be modified by applying
correction factor for appreciation/depreciation as described in Para (a) above. While comparing
the cost as referred to above, due care shall also be taken to ascertain whether the properties
under assessment and the one considered for comparison are nearly similar in terms of the
location, distance from air/rail/bus terminal, access/approach facilities, set-backs, parking
facilities, general environment, specifications and other common utilities in the building like
lifts, toilets etc., and if the same are not on equal footing, a careful assessment shall be made
for suitable addition or subtraction, as the case may be. No adjustment shall however, be
made for under or over utilization of the FAR in either case.
(c) If the information as mentioned in Para 3(vi) (a) or (b) above is not available, the net value of
the property shall be worked out by following the same procedure as given in Para 3(i) to (v)
above.
(d) In addition to working out the net value of the property in the manner as laid down in Para 3(vi)
(a)/(b) above, depreciated cost of the building portion (i.e. excluding land) shall also be worked
out as per method laid down in Para 3(i) above for the purpose of calculating the Sinking Fund
Element as described in Para 3(x) (c) below.
(vii) The annual rate of return on the net value of the property referred to in Para 3(v)/(vi) above, shall
be worked out as follows:-
(a) In case of State Capitals as well as other cities/towns which qualify for city Compensatory
Allowance 8% for non-residential use of the property and 7% for residential use.
(b) In case of other places-7% for non-residential use of the property and 6% for residential
use.
(viii) For the surplus land within the compound of the property which would offer improved access and/
or parking facilities etc. and to the extent the same is proposed to be taken on lease along with
building, the annual rate of return on the cost of the said surplus land shall be taken as 7% in case
of places mentioned in Para (vii)(a) and 6% in case of places mentioned in Para(vii) (b) above,
both for non-residential and residential use of the property.
(ix) The net annual returns on the property including surplus land, if any, shall be worked out by
addition of the returns as worked out in Para (vii)(a)/(b) and that in Para (viii) above.
(x) The following factors shall further be added to the figure as arrived at in Para 3(ix) above to
workout the gross annual return .i.e. reasonable rent per annum.
(a) Municipal tax (house/property tax) as per actual. If actual figures are not available, municipal
taxes shall be assessed based on the rateable value of the property in accordance with the
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