Atmanirbhar Bharat Package 3.0: Govt announces Income Tax relief for Developers & Home Buyers on sale of residential units
The Indian govt has announced today (November 12, 2020) the Atmanirbhar Bharat Package 3.0 for various important issues - Employment (Atmanirbhar Bharat Rozgar Yojana); Credit line scheme (Aatmanirbhar Bharat Abhiyaan); Atmanirbhar Manufacturing; PM Awaas Yojana (PMAY) –Urban; Income Tax relief for Developers & Home Buyers to boost demand for residential real estate; Support for Agriculture; Rural employment (PM Garib Kalyan Rozgar Yojana), Captial and Industrial stimulus, R&D grant for COVID Vaccine development, among others.
Also, the govt share few factors that show recovery in state of economy, some of them are as follows,
- COVID active cases decline from over 10 lakh to 4.89 lakh active cases with Case Fatality Rate (CFR) at 1.47 percent
- GST collections for October grossed Rs 1.05 lakh crore - 10% YoY
- Energy consumption growth trended higher in October at 12% YoY
- Bank credit YoY growth improved by 5.1% on 23rd October ’20
This article covers the Income Tax relief for Developers & Home Buyers to boost demand for residential real estate as announced by the finance minister Smt. Nirmala Sitharaman. The govt is understood that due to economic slowdown there has been a decline in prices of residential unit. As we know, presently, the Section 43CA of IT Act restricts differential between circle rate & agreement value @ 10% (prices may actually be lower than this).
The Ministry of Finance decides to give tax relief to both developers and home-buyers and the following decisions has been made.
- Decided to increase the differential from 10% to 20% (under section 43CA) for the period from the date of the announcement to 30th June 2021 for only primary sale of residential units of value up to Rs 2 crores.
- Consequential Relief up to 20% shall also be allowed to buyers of the these units under section 56(2)(x) of IT Act for the said period.
The necessary amendment to IT Act would be proposed in due course. This measure will reduce hardships faced by both home-buyers and developers and help in clearing the unsold housing units.
Info about 43CA (with effect from 1st April, 2014):
"43CA. Special provision for full value of consideration for transfer of assets other than capital assets in certain cases.—- (1) Where the consideration received or accruing as a result of the transfer by an assessee of an asset (other than a capital asset), being land or building or both, is less than the value adopted or assessed or assessable by any authority of a State Government for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall, for the purposes of computing profits and gains from transfer of such asset, be deemed to be the full value of the consideration received or accruing as a result of such transfer.
- (2) The provisions of sub-section (2) and sub-section (3) of section 50C shall, so far as may be, apply in relation to determination of the value adopted or assessed or assessable under sub-section (1).
- (3) Where the date of agreement fixing the value of consideration for transfer of the asset and the date of registration of such transfer of asset are not the same, the value referred to in sub-section (1) may be taken as the value assessable by any authority of a State Government for the purpose of payment of stamp duty in respect of such transfer on the date of the agreement.
- (4) The provisions of sub-section (3) shall apply only in a case where the amount of consideration or a part thereof has been received by any mode other than cash on or before the date of agreement for transfer of the asset.".