REGISTRATION VALUE OR THE GUIDANCE VALUE OF THE PROPERTIES REGISTERED – TAX EVASION – PENALTIES – TAX EVADERS GOT RED HANDED – RBI -INCOME TAX DEPARTMENT – STAMPS AND REGISTRATION DEPARTMENT – STAMP DUTY EVASION – PENALTY – 10 TIMES THE TAXES EVADED


In a bid to reduce or evade the stamp duty at the time of registration, the buyers and the sellers of the properties, have not SHOWN  the real sale price or consideration in the registered sale deed, but 90% of the buyers have borrowed money or availed institutional finance under HOME LOAN scheme, have falsified or deliberately undervalued the properties during the REGISTRATION PROCESS.

The Reserve Bank of India, being the central bank, governing all the banks in India, has all the details about the SALE AGREEMENT,(based on the sale agreement, the housing loans are sanctioned by the banks) and the SALE DEED.  It is very easy to detect the discrepancy or the undervaluation.

STAMP DUTY evasion invites 10 times the penalty of the STAMP DUTY EVADED, while, misrepresenting or concealing the actual consideration will invite CHARGES under several ACTS.

The Income Tax department has detected many such illegal transactions and are investigating too many such cases across the country and it is reported that over 30% of such tax evasion, misrepresentation and tax evasion are all in properties across BANGALORE alone.

Await the Tax Sleuths at your door steps soon for those who have different values in the SALE AGREEMENT and registered the property for LESSER VALUE in the SALE DEED.

Revision of Guidance Value/Registration Value of Properties put on HOLD


The Government of Karnataka has not enforced the revised Property Guidance Value, which was proposed to be implemented, has decided to PUT IT ON HOLD, till further orders.

New formula to compute property tax in Bangalore


New formula to compute property tax in Bangalore

The state government has decided to redraw area-wise zones based on current market guidance value.

The formula is that the property tax is based on the guidance value of the properties in the particular zone  and the tax will be charged accordingly. The tax hike might come into effect from April 1, 2016 as it had not been revised since 6 years.

The Bruhat Bengaluru Mahanagara Palike (BBMP) has already begun the zonal regulation process in all 198 wards.

THE MARKET VALUE OR GUIDANCE VALUE FOR REGISTRATION OF PROPERTIES IS UNDER REVISION


THE CVC HAS PUBLISHED THE GUIDANCE VALUE FOR THE BANGALORE URBAN DISTRICT AND INVITED OBJECTIONS FROM THE PUBLIC, TO BE SUBMITTED WITHIN 15 DAYS FROM 07-10-2014.  THE OBJECTIONS ARE BEING EXAMINED.  THE REVISED GUIDANCE OR MARKET VALUE OR THE REGISTRATION VALUE TO CALCULATE THE STAMP DUTY AND THE REGISTRATION FEE WILL BE PUBLISHED SOON.

IT IS LEARNT THAT THE AVERAGE INCREASE IS IN THE RANGE OF 20% TO 30%.  BUT IN THE BANGALORE NORTH THE VALUES HAVE SHOP UP IN SOME AREAS BY 100% AND THOUGH THE GUIDANCE VALUES HAVE BEEN INCREASED BUT THE REAL MARKET VALUE IS MUCH HIGHER.

HENCE, THERE IS LONG Q IN THE SUB-REGISTRAR OFFICES IN BANGALORE URBAN AND RURAL DISTRICTS AS THE PROPERTY BUYERS THINK THAT THERE WILL BE A REVISION FROM 01-11-2014.

Double taxation on transfer of immovable property for inadequate consideration?


 Budget 2013-14

Any immovable property  received by an Individuals / HUFs ‘without consideration’, its stamp duty value is taxable in the hands of the buyer as income from other sources, barring few exceptions.

It is now proposed that where any immovable property is received for a consideration which is less than its stamp duty value by Rupees Fifty thousand, then the difference between the stamp duty value and such consideration will be taxable as income from other sources.

Finance (No. 2)  Act , 2009 introduced taxation of certain transactions involving transfer of any property, including immovable property as income from other sources in the hands of the recipient, being Individuals / HUFs. The rationale behind it was to tax anything which is received in kind having ‘money’s worth’, which was outside the purview of the then existing provisions.

As one of the measure to widen the tax base and curb tax avoidance practice, the Union Budget 2013-14 enlarges the ambit of existing provision to levy tax on immovable property received for ‘inadequate consideration’ by Individuals / HUFs.

It is noteworthy that apart from the above, such difference is also taxable in the hands of the Seller under Section 50C of the Act as capital gains. In this context, one may notice that there appears to be double taxation under the proposed framework.

To Illustrate: Mr. X has sold his immovable property to Mr. Y for `. 50 lakhs. Stamp duty authorities assessed the value of property at `.60 lakhs. Accordingly, Mr. Y would be chargeable to tax on `.10  lakhs under Section 56(2)(vii)(b)(ii) of the Act. Further, Mr. X is liable to capital gains tax on `. 60 lakhs under Section 50C of the Act, which includes the difference of `. 10  lakhs on which Mr. Y is now made subject to tax.

It is interesting to note that similar provision was introduced by Finance (No.2) Act, 2009 w.e.f. 1 October 2009 but the same was deleted by the Finance Act, 2010, w.r.e.f. 1 October 2009. Further, it appears that such anomaly / double taxation is not prevalent either

(1) when Individuals / HUFs receive immovable property ‘without consideration’ (gift); or

(2) in respect of any property (other than immovable property), as either the capital gain on transfer as ‘gift’ is exempt or capital gain is computed on the full value of consideration, not necessarily meaning fair market value.

While in past, the Courts have held that unless otherwise expressly provided, income cannot be taxed twice and that the question of double taxation does not arise if the assessees are different, the moot point is whether it is equitable, fair and rational to enact such provisions. One will appreciate that the Government Treasury may not be worse-off, if the proposed provision leading to double taxation is discarded, as the seller was anyways made liable to pay tax on the stamp duty value. Whereas, in the absence of such provision for Individuals / HUFs receiving immovable property ‘without consideration’ (gift) or in respect of any property (other than immovable property), there may arise loss to revenue, as either the capital gain is exempt or is computed not on the fair market value.

PROPERTY MARKET VALUE FOR REGISTRATION MAY BE REVISED – GUIDELINE VALUE UP


THE GOVERNMENT MAY REVISE THE MARKET VALUE OR GUIDANCE VALUE FOR THE PROPERTIES IN BANGALORE AND THE FINAL LIST MAY BE PUBLISHED BY AUGUST, 2014.  IT IS EXPECTED THAT THE REVISED VALUES WILL BE IN LINE WITH THE ACTUAL MARKET VALUE OF THE PROPERTIES.

 

BANGALORE PROPERTY REGISTRATION VALUES


THE REVISED CIRCLE RATES/MARKET RATE/GUIDANCE VALUE FIXED BY THE VALUATION COMMITTEE WILL BE EFFECTIVE FROM 08-08-2013.

THE NEW PROPERTY VALUES WILL FORM THE BASIS FOR THE CALCULATION AND PAYMENT OF STAMP DUTY AND REGISTRATION FEE AT THE TIME OF REGISTRATION.  THIS GUIDANCE VALUE IS THE FAIR MARKET VALUE AS PER THE FINANCE ACT AND IT WILL BE CONSIDERED AS THE PROPERTY VALUE BY THE INCOME TAX DEPARTMENT FOR ITS EVALUATION AT THE TIME OF ASSESSMENT.