Circle price shall be deemed as sale/obtain consideration only if the variation amongst the agreement worth and the circle price is a lot more than 20%.
As element of the AatmaNirbhar Bharat Package three. as announced by Finance Minister on 12th November, 2020, specific earnings tax relief measures have been brought in for genuine-estate developers and house purchasers.
Till 2018, section 43CA of the Income-tax Act, 1961 offered for deeming of the stamp duty worth (circle price) as sale consideration for transfer of genuine-estate inventory in the case the circle price exceeded the declared consideration. Consequentially, stamp duty worth was deemed as obtain consideration in case of purchaser below section 56(two)(x) of the Act.
In order to supply relief to genuine estate developers and purchasers, the Finance Act, 2018, offered a secure harbour of five%. Accordingly, these deeming provisions triggered only exactly where the distinction amongst the sale/obtain consideration and the circle price was a lot more than five%.
In order to supply additional relief in this matter, Finance Act, 2020 elevated this secure harbour from five% to ten%. Therefore, presently, the circle price is deemed to be the sale/obtain consideration for genuine estate developers and purchasers only exactly where the variation amongst the agreement worth and the circle price is a lot more than ten%.
In order to enhance demand in the genuine-estate sector and to allow the genuine-estate developers to liquidate their unsold inventory at a price substantially decrease than the circle price and providing advantage to the house purchasers, it has been decided to additional boost the secure harbour from ten% to 20% below section 43CA of the Act for the period from 12th November, 2020 to 30th June, 2021 in respect of only major sale of residential units of worth up to Rs. two crore.
Consequential relief by rising the secure harbour from ten% to 20% shall also be permitted to purchasers of these residential units below section 56(two)(x) of the Act for the stated period. Therefore, for these transactions, circle price shall be deemed as sale/obtain consideration only if the variation amongst the agreement worth and the circle price is a lot more than 20%.