From ET Realty
Mumbai: Property buyers may have much to cheer about if a recommendation by the Income-Tax (I-T) Simplification Committee, led by retired Justice R V Easwar, is accepted. If they have purchased a property for significantly lower than the stamp duty value, they will not be taxed on the differential, as the relevant I-T provision is proposed to be dropped.
Each state has a pre-decided minimum value on which stamp duty is payable. Currently, if a buyer purchases a property for a price below the applicable stamp duty value and the difference between the price that has been paid and the stamp duty value is more than Rs 50,000, then such a difference is assumed to be the income of the buyer. It is taxable in the hands of the buyer, as ‘Income from other sources’. The tax rate will be the applicable rate (including surcharge and cess), depending on the tax slab the buyer falls in.
Tax experts say the intention of introducing this provision – in effect from April 1, 2014 – was to curb black money. However, the I-T panel points out that: “This tax provision works on the assumption that the buyer of the property would have paid consideration more than the stated consideration. This presumption is not in accordance with judicial interpretation and therefore deserves to be deleted.”
A real estate research adds that: “In recent times, in many regions, property prices have widely fluctuated. At the same time, states have been hiking the stamp duty value. Thus, the proposal by the I-T Simplification Committee is welcome.”