I-T to auction two dozen properties
Burdened by huge maintenance costs, the income-tax (I-T) department is likely to sell around two dozen properties scattered across the country in the current financial year (FY20). This is out of a stock of around 40-50 real estate assets that it had acquired under an old I-T Act provision relating to property undervaluation.
“These properties require timely maintenance, which is quite expensive. We are hoping to offload around two dozen of these this fiscal year through auction,” said a government official.
Last year, around four properties were sold including two in Mumbai and one in Surat.
The properties the government is eyeing to dispose of this year are located in prime locations of cities like Delhi, Mumbai, Surat, Ahmedabad, Bengaluru and Chennai.
Some of these have been converted to I-T guesthouses, while others have been given out on rent.
These facilities were bought between 1995 and 2002 by the department under the then rule, which allowed it to go for pre-emptive purchase of properties which it felt were undervalued during a transaction. The move was aimed to curb black money generation in the economy, besides increasing transparency in property transactions.
The threshold for properties that require no-objection certificate from the I-T department or could be acquired by them was between ~20 lakh and ~75 lakh, depending on the city.
However, after the rule was abolished in 2002 owing to the large-scale inconvenience and the red tape it caused, the department was left with additional costs to maintain that real estate.
Under Chapter XX- C of the I-T Act, transfer of immovable properties in specified areas was subject to issue of no-objection certificate by the tax authority. This required Form 37 I to be submitted for transactions involving high-value property transactions, exceeding a certain threshold such as ~75 lakh in Mumbai, ~50 lakh in Delhi, ~25 lakh in Kolkata and ~20 lakh in other cities.
But, disposing these properties is turning into a headache for the department, with a bearish real estate market. In many cases, the value is degraded because of developmental construction work over the years impacting sale value, or some present in the no-fly zone.