Big Income Tax relief for Home Buyers / Property Sale / Real estate Developers I CA Satbir Singh

#IncomeTax #StampDuty
Income Tax aid for #Realestate Developers and Home Buyers
Posted On: 13 NOV 2020
As a part of the AatmaNirbhar Bharat Package 3.0 as introduced by Hon’ble Finance Minister on twelfth November, 2020, sure earnings tax aid measures had been introduced in for real-estate builders and residential patrons.

Up to 2018, part 43CA of the Income-tax Act, 1961 (‘the Act’) offered for deeming of the stamp responsibility worth (circle price) as sale consideration for switch of real-estate stock within the case the circle price exceeded the declared consideration. Consequentially, stamp responsibility worth was deemed as buy consideration in case of purchaser beneath part 56(2)(x) of the Act.

In order to supply aid to actual property builders and patrons, the Finance Act, 2018, offered a protected harbour of 5%. Accordingly, these deeming provisions triggered solely the place the distinction between the sale/buy consideration and the circle price was greater than 5%. In order to supply additional aid on this matter, Finance Act, 2020 elevated this protected harbour from 5% to 10%. Therefore, presently, the circle price is deemed to be the sale/buy consideration for actual property builders and patrons solely the place the variation between the settlement worth and the circle price is greater than 10%.

In order to spice up demand within the real-estate sector and to allow the real-estate builders to liquidate their unsold stock at a price considerably decrease than the circle price and giving profit to the house patrons, it has been determined to additional improve the protected harbour from 10% to twenty% beneath part 43CA of the Act for the interval from twelfth November, 2020 to thirtieth June, 2021 in respect of solely main sale of residential models of worth as much as Rs. 2 crore. Consequential aid by growing the protected harbour from 10% to twenty% shall even be allowed to patrons of those residential models beneath part 56(2)(x) of the Act for the stated interval. Therefore, for these transactions, circle price shall be deemed as sale/buy consideration provided that the variation between the settlement worth and the circle price is greater than 20%.

Legislative amendments on this regard shall be proposed sooner or later.

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