As per the new budget 2018 proposed by the finance minister, property buyers and sellers in metros won’t need to pay any additional tax in case the difference in agreement and stamp duty values of the property stays below 5 percent. Before the proposal, circle rates were the governing criteria for buyer. Circle Rates, also known as ready reckoner or collector rates are the benchmark property prices that are set by the State Governments. In cases where sale price of property is lower than the circle rate for the same, the difference is taxed as “income from other sources” of the buyer concerned.
As far as the seller is concerned, he is supposed to calculate his capital gains on the basis of stamp duty price. In case the difference between the value of property and the circle rate exceeds 5%, the proposed benefit shall not encompass it. Also, in any case, the changes proposed are only applicable to income tax purpose. Buyers would still need to pay the stamp duty.
Such a proposal, if implemented, will undoubtedly benefit the buyers and sellers. This holds special importance in areas that have seen high property rate surge in the past years. Quoting the budget speech in this regard:
“Sometimes, this variation can occur in respect of different properties in the same area because of a variety of factors, including the shape of the plot and location.”
To condone such differences, the proposal in budget 2018 is no doubt a progressive step.
Courtesy/By: Saurav Tibrewal
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07 Feb 2018
