Budget Aims At Plugging Tax Leakages In Property Deals ...

Source: Business Standard ? By: Santosh Tiwari ? ?Publish: 4-March-2013

Buying a property at a price lower than the estimated circle rate is set to become a costly affair now. The fine prints of Budget 2013-14 indicate a clear crackdown on tax leakages in property transactions. Besides imposition of a one per cent tax deducted at source (TDS) on property transactions of more than Rs 50 lakh, the Finance Bill has also proposed to tax additional gains made through buying properties at less than the price on which the stamp duty is required to be paid. The clause has been inserted under the provision "taxability of immovable property received for inadequate consideration". The existing provisions of Section 56 of the Income Tax Act say, where an immovable property has been received by an individual or family without consideration and its stamp duty value exceeds Rs 50,000, the stamp duty value would be charged to tax in the hands of the individual or family as income from other sources. The existing provision, however, does not cover a situation where the immovable property has been received for inadequate consideration. Sudhir Chandra, former chairman of the Central Board of Direct Taxes (CBDT), said this had been a lacuna and the government was trying to plug it by amending the I-T Act. The Finance Bill has now proposed to amend the clause of Section 56 to include that the stamp duty value of an immovable property received for a consideration less than the stamp duty by an amount exceeding Rs 50,000 would be chargeable to tax in the hands of the individual or family as income from other sources. Explaining the impact of the move, a senior finance ministry official said: In simple terms, this would mean that if an individual has purchased a property by paying Rs 20 lakh and sells it to another individual at Rs 55 lakh while the price according to the stamp duty payment rate of the property should be Rs 90 lakh, the buyer will have to pay tax on the Rs 35 lakh income which has been made due to the inadequate consideration by the seller according to this provision. This will have a major impact in tackling of the property transactions by the Income Tax department, added Chandra. To accommodate practical problems associated with the provision, the government has said in the memorandum explaining the Finance Bill provisions, "Considering the fact that there may be a time gap between the date of agreement and the date of registration, it is proposed to provide that where the date of the agreement fixing the amount of consideration for the transfer of the immovable property and the date of registration are not the same, the stamp duty value may be taken as on the date of the agreement, instead of that on the date of registration". This exception, however, will apply only in a case where the full price of the property, or a part of it, has been paid by any mode other than cash on or before the date of the agreement fixing the amount for the transfer of property. The amendment will take effect from April 1, 2014, and will apply in relation to the assessment year 2014-15 and subsequent assessment years.

Posted | Viewed times

Source: http://www.gurgaonscoop.com/budget-aims-at-plugging-tax-leakages-in-prope

paris jackson US weekly amelia earhart Sally Ride Ichiro minka kelly James Holmes court