Page 37 - Seniors Today Febuary 2020
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income, then there is a limitation on the reference to Government valuation. At
change from year to year. Each assessee present the law states that when a property
must, therefore, look to his or her tax is sold, tax has to be paid by the Seller with
situation and work out which is better, reference to the Government Valuation
whether to claim deductions and then pay, or the actual transaction price, whichever
or not to claim deductions. is higher. There is only a margin of 5%
allowable. If, therefore the Government
Real estate valuation is Rs. 1 crore and if a property
There are several provisions relating to Real is sold for, say, Rs. 91 lakh, then since the
Estate. difference is more than 5%, the seller would
One of these changes relates to have to pay tax as if he or she had received
determining the cost of acquisition of Rs. 1 crore. A buyer also would be deemed
a property. If one had purchased an to have paid Rs.1 crore, even if he has
Immovable Property before 1.4.2001, actually paid only 91 lakh. The Government
then there is a benefit available under the now proposes to increase the “safe harbour”
Income-tax Act, i.e. to step up the cost to from 5% to 10% of the transaction value.
the value as on 1.4.2001. Normally, the So, if the Government valuation is Rs. 1
Capital Gain is the Selling price minus the crore and you sell the property for, say, Rs.
actual cost. However, the Government gives 91 lakh, then Rs. 91 lakh + 10% thereof, i.e.
a benefit. This is to step up the cost from Rs. 9.1 lakh would bring you to a total of
the figure of actual cost to the value as on Rs.100.1 lakh. Since the Stamp valuation is
1.4.2001. The amendment that is now being within 10% of the transaction price, in such
made is to say that the value as on 1.4.2001 a case the seller will be allowed to pay tax
is to be the value as per the Government’s with reference to the transaction value and
figures for stamp duty, which, in Mumbai, the Government Valuation can be ignored.
is referred to as Reckoner value and in other
places referred to as Circle Value etc. If, Affordable housing
therefore, the Government valuation as on There is presently an exemption available
1.4.2001 was Rs. 5,000/- per sq.ft. then one from tax for a Developer of affordable
can substitute that for the original cost. This housing, provided the construction
can give a benefit to the assessee. permissions had been taken on or before
Another amendment is proposed with 31.3.2020. This date is to be extended to
The Vivad Se Vishwas provision enables an assessee to pay back taxes with a reduced or nil penalty
37 SENIORS TODAY | Issue #8 | February 15, 2020
