One can now buy a house at a rate 20% lower than the one arrived at according to the circle rate, also known as the ready reckoner rate, without having to pay penal income tax. The developer would also not have to pay income tax on such a deal.
Circle rate is the minimum rate of property set by the authorities for a particular area.
Here is all you need to know about the new norm:
- This rule applies to residential units up to Rs2 crore and will remain valid till June 30, 2021, according to a statement issued by the finance ministry.
- This tax relief will result in an increased demand and will help clear unsold inventory of residential units valued at up to Rs2 crore.
- Prices of many residential units have gown below circle rates due to the economic crisis brought about by coronavirus and as a result, market rates are much below circle rates for these places. Before this new rule, if buyer sold property at a rate lower that the circle rate, the amount of difference between the circle rate and the agreed rate was taxable for both buyer and seller.
- Currently, the law restricts differential between circle rate and agreement value at 10%. The government allowed developers to sell at rates up to 10% lower than the circle rate without attracting additional tax.
{{/usCountry}}- Currently, the law restricts differential between circle rate and agreement value at 10%. The government allowed developers to sell at rates up to 10% lower than the circle rate without attracting additional tax.
{{/usCountry}}- According to Finance Minister Nirmala Sitharaman, “the move will help reduce hardships faced by both home-buyers and the developers and help clear unsold inventory.”
- The Indian economy has recovered from its worst-ever contraction of 24 per cent in the April-June quarter but will end up shrinking by close to 10 per cent in the fiscal year to March 2021, according to news agency PTI. This move is seen as the government’s attempt to bring the economy back on track.
(with agency inputs)