Authorities exempts properties in unauthorized colonies in Delhi from revenue tax

In an enormous tax aid for Delhi’s unauthorized colonies that had been regularized final yr, the federal government has exempted house owners from revenue tax even when that they had bought land or home at charges under the prevailing market worth.

The federal government had final yr legalized unauthorized colonies within the nationwide capital, giving homeowners authorized property rights.

Since these colonies had been beforehand unauthorized, some might have bought homes or lands at under the circle price fastened by the federal government for registration of properties.

Now, the federal government has determined to provide such house owners exemption from fee of revenue tax. With out this exemption, such house owners have grow to be relevant on the distinction between truthful market worth and precise buy worth.

The Central Board of Direct Taxes (CBDT) via a notification stated the exemption would come into impact from April 1, 2020, and can be relevant for Evaluation yr 2020-21 and subsequent years.

It stated tax wouldn’t be levied on “any immovable property, being land or constructing or each, obtained by a resident of an unauthorized colony within the Nationwide Capital Territory of Delhi, the place the Central Authorities..regularized the transactions of such immovable property primarily based on the newest Energy of Lawyer, Settlement to Sale, Will, possession letter and different paperwork … in favor of such resident”.

Presently tax is levied solely on the differential of truthful market worth (FMV) and precise buy worth, if the home property is acquired at a worth decrease than the circle price.

Nangia Andersen LLP Companion Suraj Nangia stated it is a peculiar case, the place the property may need been acquired by respective people a very long time again by the use of Normal POA (Energy of Lawyer) or different related authorization and solely such buy has been regularized in means of regularizing the unauthorized colonies.

“Due to this fact virtually, all of the acquisitions earlier than that date of regularization have been tax exempted by the use of current notification, in order that particular person residents do not should pay tax on any notional revenue, even when FMV as on date of regularization is greater than the acquisition worth of such property, Nangia stated.

Over 1,700 unauthorized colonies In Delhi had been regularized in December final yr after Parliament handed a legislation permitting possession rights to be given on the premise of energy of lawyer, settlement of sale, will or possession letter.

Because the buy worth of those home properties had been lower than the circle price prevailing in these areas, the differential within the worth would have been topic to revenue tax within the fingers of the proprietor.

The I-T exemption given by the CBDT via notification dated June 29 exempts the proprietor of those properties from fee of tax on the differential of FMV and buy worth.

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