As part of the AatmaNirbhar Bharat Package 3.0 as announced by Hon\u2019ble Finance Minister on 12th November, 2020, certain income tax relief measures were brought in for real-estate developers and home buyers.<\/p>\n
Up to 2018,\u00a0section 43CA\u00a0of the Income-tax Act, 1961 (\u2018the Act\u2019) provided for deeming of the stamp duty value (circle rate) as sale consideration for transfer of real-estate inventory in the case the circle rate exceeded the declared consideration. Consequentially, stamp duty value was deemed as purchase consideration in case of buyer under\u00a0section 56(2)(x)\u00a0of the Act.<\/p>\n
In order to provide relief to real estate developers and buyers, the\u00a0Finance Act, 2018,\u00a0provided a safe harbour of 5%. Accordingly, these deeming provisions triggered only where the difference between the sale\/purchase consideration and the circle rate was more than 5%. In order to provide further relief in this matter,\u00a0Finance Act, 2020\u00a0increased this safe harbour from 5% to 10%. Therefore, currently, the circle rate is deemed to be the sale\/purchase consideration for real estate developers and buyers only where the variation between the agreement value and the circle rate is more than 10%.<\/p>\n
In order to boost demand in the real-estate sector and to enable the real-estate developers to liquidate their unsold inventory at a rate substantially lower than the circle rate and giving benefit to the home buyers, it has been decided to further increase the safe harbour from 10% to 20% under\u00a0section 43CA\u00a0of the Act for the period from 12th November, 2020 to 30th June, 2021 in respect of only primary sale of residential units of value up to Rs. 2 crore. Consequential relief by increasing the safe harbour from 10% to 20% shall also be allowed to buyers of these residential units under\u00a0section 56(2)(x)\u00a0of the Act for the said period. Therefore, for these transactions, circle rate shall be deemed as sale\/purchase consideration only if the variation between the agreement value and the circle rate is more than 20%.<\/p>\n
Legislative amendments in this regard shall be proposed in due course.<\/p>\n","protected":false},"excerpt":{"rendered":"