Rule 173 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Rule 173 of the Income-tax Rules, 2026 splits valuation work by value — above Rs 5 crore, Rs 1 to 5 crore and up to Rs 1 crore; rule 174 confines inspection to 6 a.m. to 6 p.m. on non-holidays.
The hierarchy rule 173 sets up
For section 2(110) read with section 269:
- Regional Valuation Officers shall exercise, within such areas as the Board may direct, general supervision over the work of District Valuation Officers, Valuation Officers and Assistant Valuation Officers; and
- District Valuation Officers, Valuation Officers and Assistant Valuation Officers shall perform the functions of a Valuation Officer in respect of such areas and in relation to such class of assets, properties or investments, as the Board may direct.
Rule 173 has no 1962 parallel in the mapping table.
The value bands in rule 173
Where directions assign functions in relation to buildings or lands or any rights in buildings or lands in an area to all three officers, the work is divided as follows:
| Sl. | Officer | Value of asset |
|---|---|---|
| 1 | District Valuation Officer | More than five crore rupees |
| 2 | Valuation Officer | More than one crore rupees and up to five crore rupees |
| 3 | Assistant Valuation Officer | Up to one crore rupees |
Sub-rule (7): for this purpose the value is taken in respect of the asset as a whole, whether owned by the assessee individually or jointly. A half share in a Rs 8 crore property is therefore a row 1 case, not a row 2 one.
Sub-rule (7) of rule 173 is short and easy to miss, and it moves cases up the hierarchy. The band is set by the value of the asset as a whole, regardless of how many co-owners there are or what fraction the assessee holds. Four co-owners of a Rs 6 crore building are each in a matter for the District Valuation Officer.
Which value rule 173 uses
| Reference | Value taken |
|---|---|
| Under section 78(2) | The stamp duty value of the capital asset |
| Under section 91(1) | The value claimed by the assessee |
| Otherwise | The latest value as declared in the return of income for any tax year |
| Where no value is ascertainable from the return | Functions are performed in accordance with the direction of District Valuation Officers |
Note what all four have in common: the band is fixed by a value that exists before the valuation begins — a stamp duty figure, the assessee's own claim, or the return. The valuer's eventual opinion does not determine who should have valued it.
Upward flexibility
Sub-rules (5) and (6) both allow a senior officer to take a smaller matter:
- the District Valuation Officer having jurisdiction may himself perform the functions in relation to a row 2 asset; and
- the Valuation Officer having jurisdiction may himself perform them in relation to a row 3 asset,
in each case if he considers it necessary or expedient so to do for the purpose of proper and efficient management of the work of valuation.
Both sub-rules let an officer take a case below his band. Neither lets an officer take one above it. An Assistant Valuation Officer cannot value a Rs 3 crore property under rule 173, however convenient — the case belongs to the Valuation Officer, who may in turn pass it up but not down beyond what the Table allows.
Rule 174 — when an inspection may be made
For section 269(3), on any day except public holidays, at any time between 6 a.m. and 6 p.m., the Valuation Officer, or any engineer, overseer, surveyor or assessor authorised by him by order in writing, may:
- enter any land within the limits of the area assigned to the Valuation Officer;
- enter any land, building, or other place belonging to or occupied by any person in connection with whose assessment a reference has been made to the Valuation Officer; or
- inspect any asset in respect of which a reference has been made.
Sub-rule (2): "public holiday" includes Sundays, and any other day declared by the Central Government, by notification, to be a public holiday.
| Limb | Reach |
|---|---|
| (a) | Any land in the assigned area — no reference needed |
| (b) | Land, building or other place of a person in connection with whose assessment a reference has been made |
| (c) | The asset itself that is the subject of a reference |
Limb (a) is notably wider than the other two — it is tied to the officer's assigned area rather than to any particular reference, which is what allows comparable properties to be inspected when valuing a subject property.
Rule 174 allows an engineer, overseer, surveyor or assessor to exercise the power, but only where authorised by the Valuation Officer by order in writing in this behalf. A person arriving to inspect who is not the Valuation Officer should be able to produce that written authorisation — and the time and day limits apply to him exactly as they do to the officer.
Worked example
| Facts | Position |
|---|---|
| Property with a declared value of Rs 7.4 crore | District Valuation Officer |
| Property of Rs 2.6 crore held by two co-owners equally | Still a Valuation Officer case — whole-asset value governs |
| Property of Rs 6 crore held by four co-owners | District Valuation Officer for each |
| Reference under section 78(2) | Band set by the stamp duty value |
| Reference under section 91(1) | Band set by the value claimed by the assessee |
| District Valuation Officer takes a Rs 3 crore case himself | Permitted under sub-rule (5) |
| Inspection attempted at 7 p.m. | Outside the rule 174 window |
| Inspection on a Sunday | Not permitted — Sundays are public holidays |
Compliance checklist
- Establish which value measure applies — stamp duty value, value claimed, or the latest returned value.
- Apply the band to the asset as a whole, not to the assessee's share.
- Check the officer conducting the valuation is within his band, or has properly taken a lower one.
- Remember that no officer may take a case above his band.
- For an inspection, check the day is not a public holiday and the time is between 6 a.m. and 6 p.m.
- Ask any person other than the Valuation Officer for the written authorisation.
- Note that entry on land within the assigned area does not require a reference.
Common mistakes
- Banding by the assessee's share rather than the whole asset.
- Using the valuer's own opinion to fix the band.
- Assuming a junior officer may take a larger case.
- Permitting an inspection on a Sunday or after 6 p.m.
- Not asking for the written authorisation of a delegated inspector.