NEW DELHI: In a bid to combat the circulation of unaccounted money or black money in the real estate sector, the government has implemented a series of stringent measures, ranging from legislative amendments to enforcement actions.
Under the provisions of the Income Tax Act, several key legislative amendments have been introduced, as per the written reply by Minister of State for Finance Pankaj Chaudhary to the parliamentary question.
Section 43CA and Section 50C of the Income Tax Act now require the adoption of the stamp duty value as consideration if it exceeds the declared amount. Section 50CA, along with relevant Income Tax Rules, mandates the use of the stamp duty value of immovable property to determine capital gains on the transfer of shares in unlisted companies.
To further prevent tax evasion, Section 56(2)(x) has been enacted to tax the difference between the stamp duty value and the consideration received if it exceeds Rs 50,000 in the hands of the recipient. Moreover, Section 194-IA now requires the deduction of 1% tax at the time of payment for any sum exceeding Rs 50 lakhs as consideration for immovable properties.
“In order to curb cash dealing in real estate transactions, section 269SS was amended to prohibit receipt of Rs 20,000 or more for transfer of immovable property otherwise than by banking channel. Similar restriction is provided under section 269T,” Chaudhary said.
A similar restriction is imposed under Section 269T to enhance transparency. Specified entities are required to furnish a statement of financial transactions (SFT) for relevant transactions, including those related to property, as per Section 285BA. Rule 114B and Rule 114E of the Income tax Rules, 1962, mandate the mandatory quoting of PAN and reporting of immovable property transactions above specified thresholds.
“The Benami Transactions (Prohibition) Act, 1988 was comprehensively amended through the Benami Transactions (Prohibition) Amendment Act, 2016 to provide for an effective regime for prohibition of benami transactions. Such benami transactions include transactions in real estate sector also,” he added in the written reply. “Appropriate actions as per the provisions of the Income Tax Act, 1961 include conducting searches and surveys, assessment of income, levy of tax, imposition of penalty, launching of prosecution etc,” he added.