Existing Section 50C: Section 50C affects all the transactions of land and buildings in the country except Jammu and Kashmir. This section comes into picture at the time of computing capital gains under section 48 of the Income Tax Act, 1961. Section 50C provides that if the value stated in the instrument of transfer is less than the valuation adopted, assessed or assessable by the stamp duty authorities, the valuation as adopted, assessed or assessable by the stamp duty authorities will be considered for the purpose of computation of capital gains arising on transfer of land or building or both. Income tax consultants
For example: If in the agreement for sale, the value of the flat is stated at Rs. 24 lacs but according to the stamp duty authorities the valuation of the flat is Rs. 34 lacs, then it will be considered that the flat has been sold for Rs. 34 lacs and capital gains will be computed on the basis of Rs. 34 lacs.
Section 50C is applicable only to transfer of land or building or both provided it is a capital asset. Thus, in cases when such assets are held as stock-in-trade, the section does not apply. By implication, it does not affect sale of land or building by a builder or a developer because land, building, shops, flats, etc sold by the builders and developers are generally stock-in-trade in their hands and not the capital assets.
Last few statements in bold letters acts as a platform for the insertion of new section 43CA
New Section 43CA(With effect from 1st April, 2013): A new section 43CA has been
inserted by the Finance Act, 2013 which provides stamp duty value to be considered for the purpose of computation of income under the head "Profits and Gains of Business or Profession" in respect of all transactions relating to land or building or both. This amendment has an adverse impact on almost all transactions of real estate entered into by all real estate developers and traders in India because their income would be computed on the basis of notional income and not the real income as appearing in the books of account of a tax payer.
New Section 43CA(With effect from 1st April, 2013): A new section 43CA has been
inserted by the Finance Act, 2013 which provides stamp duty value to be considered for the purpose of computation of income under the head "Profits and Gains of Business or Profession" in respect of all transactions relating to land or building or both. This amendment has an adverse impact on almost all transactions of real estate entered into by all real estate developers and traders in India because their income would be computed on the basis of notional income and not the real income as appearing in the books of account of a tax payer.
Exception to Section 43CA:
• Sale consideration is received in a mode other than cash.
• Sale consideration is received on or before the date of agreement of transfer.
• The date of an agreement fixing the value of consideration for the transfer of the
• asset and the date of registration of the transfer of the asset are not the same.
When the above three conditions are satisfied, the stamp duty value may be taken as on the date of the agreement for transfer and not as on the date of registration for such transfer.
Section 56(2)(vii):
Existing Law: Where any immovable property is received by an individual or HUF without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property would be charged to tax in the hands of the individual or HUF as income from other sources. It is further stated that the existing provision does not cover a situation where the immovable property has been received by an individual or HUF for inadequate consideration.
As amended by the Finance Act, 2013: The provisions of clause (vii) of sub-section (2) of section 56 is amended so as to provide that where any immovable property is received for a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consideration, shall be chargeable to tax in the hands of the individual or HUF as income from other sources.
Exception to Section 56(2)(vii):
• Sale consideration is received in a mode other than cash.
• Sale consideration is received on or before the date of agreement of transfer.
• The date of an agreement fixing the value of consideration for the transfer of the
• asset and the date of registration of the transfer of the asset are not the same.
When the above three conditions are satisfied, the stamp duty value may be taken as on the date of the agreement for transfer and not as on the date of registration for such transfer.
Section 194IA: A new section 194IA has been inserted by Finance Act, 2013 so as to
provide that every transferee, at the time of making payment or crediting of any sum as consideration for transfer of immovable property (other than agricultural land) to a resident transferor, shall deduct tax, at the rate of 1% of such sum only if the purchase value of immovable property is in excess of Rs.50 Lakhs. Consequent to this insertion, the tax payers would be required to obtain TAN (Tax Deduction Account Number) Number and also perhaps would be required to file the yearly TDS return(With effect from 1/6/2013).
Section 80EE (Inserted by Finance Act, 2013): Helpful for individuals having total income
beyond Rs. 6 lacs:
• Lender is a bank or public financial institution.
• Loan sanctioned between 1/4/2013 to 1/4/2014.
• Loan is for acquisition or construction of a new house.
• On the date of sanction of loan he should not own any residential property. Loan amount is less than or equal to Rs. 25 lacs.
• Value of residential property is less than or equal to Rs. 40 lacs. Only interest paid is allowed up to Rs. 1 lac. in the year I. If less than Rs 1 lac. is claimed in the I year, then the balance amount can be claimed in the year II. Maximum Rs 1 lac deduction can be claimed in the 2 year spread.
• Sale consideration is received in a mode other than cash.
• Sale consideration is received on or before the date of agreement of transfer.
• The date of an agreement fixing the value of consideration for the transfer of the
• asset and the date of registration of the transfer of the asset are not the same.
When the above three conditions are satisfied, the stamp duty value may be taken as on the date of the agreement for transfer and not as on the date of registration for such transfer.
Section 56(2)(vii):
Existing Law: Where any immovable property is received by an individual or HUF without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property would be charged to tax in the hands of the individual or HUF as income from other sources. It is further stated that the existing provision does not cover a situation where the immovable property has been received by an individual or HUF for inadequate consideration.
As amended by the Finance Act, 2013: The provisions of clause (vii) of sub-section (2) of section 56 is amended so as to provide that where any immovable property is received for a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consideration, shall be chargeable to tax in the hands of the individual or HUF as income from other sources.
Exception to Section 56(2)(vii):
• Sale consideration is received in a mode other than cash.
• Sale consideration is received on or before the date of agreement of transfer.
• The date of an agreement fixing the value of consideration for the transfer of the
• asset and the date of registration of the transfer of the asset are not the same.
When the above three conditions are satisfied, the stamp duty value may be taken as on the date of the agreement for transfer and not as on the date of registration for such transfer.
Section 194IA: A new section 194IA has been inserted by Finance Act, 2013 so as to
provide that every transferee, at the time of making payment or crediting of any sum as consideration for transfer of immovable property (other than agricultural land) to a resident transferor, shall deduct tax, at the rate of 1% of such sum only if the purchase value of immovable property is in excess of Rs.50 Lakhs. Consequent to this insertion, the tax payers would be required to obtain TAN (Tax Deduction Account Number) Number and also perhaps would be required to file the yearly TDS return(With effect from 1/6/2013).
Section 80EE (Inserted by Finance Act, 2013): Helpful for individuals having total income
beyond Rs. 6 lacs:
• Lender is a bank or public financial institution.
• Loan sanctioned between 1/4/2013 to 1/4/2014.
• Loan is for acquisition or construction of a new house.
• On the date of sanction of loan he should not own any residential property. Loan amount is less than or equal to Rs. 25 lacs.
• Value of residential property is less than or equal to Rs. 40 lacs. Only interest paid is allowed up to Rs. 1 lac. in the year I. If less than Rs 1 lac. is claimed in the I year, then the balance amount can be claimed in the year II. Maximum Rs 1 lac deduction can be claimed in the 2 year spread.
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