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In an attempt to curb tax evasion through under-valuation and concealment of information in property purchase and sales, the budget has proposed a tax deduction at source (TDS) of one per cent on all transfers of immovable properties involving transactions of over R50 lakh.
However, agricultural land deals will be exempted.
“One-half of the transactions do not carry the PAN (permanent account number) of the parties concerned and with a view to improving the reporting of such transactions and the taxation on capital gains, I propose to apply TDS at the rate of one per cent on the value of the transfer of immovable properties, where the consideration exceeds R50 lakh,” Chidambaram said.
The step has been taken to widen the tax base. There is a statutory requirement under section 139A of the Income Tax Act to quote Permanent Account Number (PAN) in documents pertaining to the purchase or sale of immovable properties for value of R5 lakh or more. However, the information furnished to the department in Annual Information Returns indicate that a majority of the purchasers or sellers of immovable properties, valued at R30 lakh or more in 201112 did not quote or quoted invalid PAN in the property transfer documents.
In order to reduce the compliance burden on small taxpayers, the budget further proposed that no deduction of tax shall be made where the total amount of consideration for the transfer of an immovable property is less than R50 lakh.
Seeking to check demand for gold, a Reserve Bank of India panel had recently proposed measures such as making compulsory the quoting of PAN numbers in high-value purchases, and restriction on gold loans.
Hindustan Times, New Delhi, 01-03-2013
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