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National: I-T amendments impacts property sales and property gifts

As per amendments to Section 56 of the Income Tax Act, which were made by the Union Finance Minister P Chidambaram, if a property is undervalued at say, Rs 80 lakh while the Ready Reckoner (RR) property rate for the same is Rs 1 Cr., then the buyer will have to pay 30 percent income tax on the difference, which in this case would be, 30% of income tax on Rs 20 lakhs. Such an amendment will be applicable to property deals where the stamp duty is over Rs 50,000. This is amount which a buyer will have to pay in addition to the stamp duty. Moreover, there will also be repercussions with respect to property gifts in cases when the gift does not come from close relatives.

 

So for instance, a recipient of a property gift worth Rs 1 Cr. will have to pay stamp duty on Rs 1 Cr. to the Income Tax Department.

 

Realty experts worry that in cities like Mumbai where the RR is extremely high, such an amendment will lead to further increase in property transactions.

 

Favista’s view: It might affect the real estate industry negatively by increasing property prices. On the other hand, it also suggests that it is probably a good idea to invest before such an amendment is implemented, that is before June 1, 2013. Please click on the following link for further details: http://www.favista.com/cms/blogs/2013/03/05/national-government-initiates-to-control-flipping-in-realty-market

This entry was posted in Budget 2013, Gurgaon, Mumbai, NCR Delhi, Newsletter, NOIDA. Bookmark the permalink.

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