Property deals face strict TDS vetting

Gold buys too to come under lens

Property deals face strict TDS vetting

 In order to check generation of black money, especially in the real estate sector and in gold purchase, the government may make it mandatory to follow tax deduction at source (TDS) rules on sale and purchase of property and gold.

The Centre may soon ask state governments to strictly adhere to the TDS rules for sale and purchase of real estate. Transactions in immovable property are usually undervalued and under-reported. Almost half the transactions are done without PAN card of the parties concerned.

To check such transactions which tend to generate black money, the government had in Budget of 2012-13 introduced a law under which TDS on transaction of immovable property, barring agricultural land, would be deducted at the rate of one per cent where the aggregate value of transaction exceeds Rs 50 lakh.

The certificate of this TDS deduction is to be presented to the registrar at the time of registration of property. However, the rule is not strictly adhered to by states, leading to gaps and lapses in reporting of such transactions.

“Tightening of property purchase reporting norms is one the measures high on government agenda to curb generation and investment of black money,” officials told Deccan Herald. A white paper on black money prepared by the finance ministry in 2012 suggested that the real estate sector in India constituted about 11 per cent of the GDP.

Unaccounted money

It said that investment in property was a common means of parking unaccounted money as a large number of transactions in real estate were not reported or are under-reported.

 During last month’s conference of tax commissioners in the national capital, the authorities stressed on the need to impress upon the state governments to follow TDS property purchase rules more strictly.

Similarly, in 2012, the UPA government had also introduced a one per cent tax collection at source on cash purchase of gold, including coins and articles, exceeding over Rs 2 lakh, and jewellery purchase in cash in excess of Rs 5 lakh.

The current government is contemplating strict observation of the law, officials said.
They said the measures will on the one hand help curb black money and on the other, will shore up government’s revenues to be channelised to more productive resources. These measures are over and above the legislations introduced in Parliament. The government recently pushed through the black money bill in both Houses of Parliament to check black money stashed abroad, which requires compulsory disclosure of foreign assets and income, and subjects evaders to stiff penalties and jail terms.

 To check tax evasion, the government has also introduced legislation aimed at amending the Benami Transactions (Prohibition) Act.

It will help check creation of black money in India, especially in real estate transactions.

Law’s long arm

The government had in Budget 2012-13 mandated TDS on transaction of immovable property
The certificate of this TDS deduction is to be
presented to the registrar at the time of registration
But the rule is not strictly adhered to by states,
leading to gaps and lapses
The 2012 tax on gold and jewellery purchase in cash also await strict interpretation

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