The Government Approved Painting Valuer selects the appropriate methodology based on the type of painting, the purpose of valuation and the quality of available market evidence.
The framework considers whether the painting is auction-traded, uniquely commissioned or income-generating, whether the requirement is current FMV, retrospective valuation, replacement cost or liquidation, and whether reliable auction, dealer or income evidence is available.
For the vast majority of Indian painting valuations, the Market Comparison Approach is the appropriate primary methodology, while the Retrospective, Income and Cost Approaches are applied where the specific valuation context requires them.
The valuer considers whether the work has an established auction market, is a unique commissioned or site-specific work, or generates a measurable income stream.
The assignment may require current Fair Market Value, a historical FMV, replacement cost, liquidation-related value or another purpose-specific basis.
The available evidence may include auction records, dealer prices, historical market records or reproduction and licensing income data.
The Market Comparison Approach derives the painting’s Fair Market Value from prices achieved for comparable paintings in the open auction market.
It is appropriate for paintings by artists with a documented auction history, including PAG blue-chip, Indian modern and miniature paintings where reliable comparable records are available.
Auction records are identified for the same artist or, where appropriate, the same school and period, considering subject, period, quality, medium and size.
Comparable prices are examined for time, quality, condition, provenance and size. Each factor is considered according to its relevance to the specific painting.
Following the adjustments, the comparable prices converge around a valuation range. The valuer determines the FMV within that range using the specific market context and documents the comparable evidence and adjustment rationale in the certificate.
The Retrospective Valuation for Section 55(2)(b) requires the Government Approved Painting Valuer to establish the FMV of a specific painting as on 1 April 2001.
The methodology involves systematic research of auction records from approximately 1998 to 2003, identification of the closest comparable records, adjustment for quality or condition differences and interpolation to the 1 April 2001 valuation date.
The 2001 Indian painting market was a pre-boom market. Institutional auction infrastructure and the systematic collector base were still developing.
For many pre-2001 Indian painting acquisitions, the retrospective value may therefore be substantially below the current FMV. The historical valuation becomes an important input where the applicable Finance Act 2024 transitional computation requires the 1 April 2001 FMV.
The Income Approach applies to paintings that generate a sustainable income stream, primarily works licensed for reproduction, book covers, merchandise or advertising.
It may also apply to institutional collections where admission income is specifically attributable to the collection.
The Cost Approach is appropriate where reproduction or replacement cost is the most relevant value basis, particularly for commissioned murals and site-specific works that cannot readily be sold in the open market.
Consideration of the standing and capability of an artist able to create an equivalent work.
Estimated daily fee rate multiplied by the anticipated number of days required to create the equivalent work.
Relevant materials and production requirements are incorporated into the replacement cost assessment.
Installation and site-specific requirements are considered where they form part of the equivalent replacement work.
Share the painting details and valuation purpose with A2Z Valuers. The appropriate valuation methodology can then be determined around the asset, valuation date and available evidence.