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I-T Act change: Property sale at lower than circle rate to be exempt from tax

I-T Act change: Property sale at lower than circle rate to be exempt from tax

The government on Friday said it would amend the income-tax law to exempt real-estate developers and homebuyers from tax liability if the actual consideration for an asset is lower than the stamp duty value (circle rate) by not more than 20%.

The changes would be applicable only to primary sale of residential properties not exceeding Rs 2 crore in value.
Without the relaxation, the developer selling the flat at a price lower than the circle rate would be liable to pay tax on profits calculated on the basis that the flat/home was sold at the circle rate.

Similarly, the buyer would be taxed on differential amount between the circle rate and the actual consideration under section 56(2)X — which is an anti-evasion provision and brings to tax consideration that deviates from fair market value.

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