In a bid to increase revenue of the exchequer, the Income Tax Department has set a new agenda. The department is working towards increasing voluntary compliance among tax evaders in real estate industry.
The department’s recent revenue augmentation exercise led to the revelation that many landowners have not paid capital gains tax under joint development agreement (JDA) model for long.
Going through the last three years’ records, the department has come across 3,500 cases of tax evasions by landowners. Further, the department has estimated that more than 1 lakh properties have been undervalued.
Speaking to Express, S Ravi, director, IT (Investigation), Karnataka-Goa, said not just developers in Bangalore but those in Mangalore, Mysore and Goa were also under the scanner.
“The mechanisms adopted by the department to collect information have changed over time. We are now using information technology to collect information, collate them and... we will act upon the information. However, we have realised that many offenders were ignorant about a certain section of the IT Act, which has led them to evade taxes,” he said.
Section 50 (C) of the Income Tax Act-1961 makes a special provision for full value of consideration in certain cases of depreciable assets.
“Many landowners have entered into JDAs with builders, and in lieu of transfer of their sites they get money, including refundable or non-refundable deposits. However, such transfer of lands and receipts in lieu of such transfer entail a tax liability on account of the income from capital gains, which has either escaped the attention of thousands of such landowners or is being intentionally avoided,” Ravi said.
Further, he said the department was now conducting an intensive verification in each case of evasion, though there was a shortage in manpower. “We are appealing to all these landowners to pay their capital gains taxes voluntarily. The department will take action against defaulters,” he said.