Vociferous demand by the realtors to treat the actual sale value while calculating gain from property sale has been almost ignored by the Finance Minister. The Finance Minister has provided only an elbow sweetener in the budget by providing that no adjustment shall be made in a case where the circle rate value does not exceed 5% of the consideration. According to some tax consultants, even now at commissioner and ITO level 5% variation from circle rate is allowed while computing the gain. Mr Jaitley through his budget announcement has formalized this practice.
Section 43CA, inserted by Finance Act 2013, on lines of Section 50C, provides for considering valuation assessed or assessable by any authority of State Govt. for the purpose of payment of Stamp Duty as the value of consideration received or accruing as a result of transfer of an asset being land or building or both, by the assessee. Stamp duty is generally calculated on valuation of asset based on circle rate fixed by State Govts, which are in many cases higher than the market value or the value negotiated between seller and buyer. This makes seller and buyer both liable to pay tax on notional gain / profit under the provisions of sections 43CA, 50C and 56(2)(vii)(b), making the case of double taxation. Therefore, realtors were demanding that the actual sale value should only be the basis for computing tax on profit and gain from land and building assets and not the notional income.
And the Finance Minister’s announcement in the budget was nowhere near to the realtors’ expectation.