Relevant
provisions of Income-tax laws (ITL):
· Where any person has received consideration for transfer of an immovable property[1], being land or building or both, and such consideration is less than the value[2] adopted or assessed by authorities for the purpose of stamp duty, for computing profits and gains on transfer, the value adopted by the authorities is deemed to be the consideration (deemed consideration provision).
However, in case where the
difference between the value adopted or assessed for the purpose of stamp duty
and actual consideration does not exceed 10% (tolerance limit) of the actual
consideration, the deemed consideration provision is not applicable.
·
Where any person has received any immovable property, being land
or building or both, for a consideration and such consideration is less than
the value adopted or assessed by the authorities for the purpose of stamp duty,
such difference is considered as income of the person (gift tax provision).
However, in case where the
difference between the value adopted or assessed for the purpose of stamp duty
and actual consideration discharged does not exceed 10% (tolerance limit) of
actual consideration, gift tax provision is not applicable.
Relief
granted by the Union Finance Minister in press conference dated 12 November
2020:
·
It has been acknowledged that the economic slowdown has led to a
decline in the prices of residential units and this fall is in excess of the tolerance limit.
·
In order to (i) boost the demand for the struggling residential
real estate sector, (ii) allow the developers to sell their unsold inventory
and (iii) reduce the hardships faced by the home buyers/developers and for the revival of the real estate sector,
reliefs have been granted under the
ITL by increasing the tolerance limit
from 10% to 20% in applying the deemed consideration provision and gift tax provision.
·
Relief is granted only to primary sale of residential units of
value up to INR 20m between the period 12 November 2020 to 30 June 2021.
It has been clarified that suitable amendments will be carried out in the ITL in due course
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