Big relief: Property owners in unauthorised colonies exempted from income tax

NEW DELHI: In a big tax relief for Delhi’s unauthorised colonies that were regularised

last year, the government has exempted owners from income tax even if they had purchased

land or house at rates below the prevailing market price. The government had last year legalised unauthorised colonies in the national capital, giving house owners legal property rights.

Since these colonies were previously unauthorised, some may have purchased houses or

land below the circle rate fixed by the government for registration of properties. Now, the government has decided to give such owners exemption from payment of income tax. Without this exemption, such owners have become applicable on the difference between fair market value and actual purchase price. The Central Board of Direct Taxes (CBDT) through a notification said the exemption would come into effect from April 1, 2020, and would be applicable for the Assessment year 202021 and subsequent years.

Since the purchase price of these house properties was less than the circle rate prevailing in those areas, the differential in the price would have been subject to income tax in the hands of the owner. The I-T exemption given by the CBDT through a notification dated June 29 exempts the owner of these properties from payment of tax on the differential of FMV and purchase price.

The CBDT said tax would not be levied on “any immovable property, being land or building or both, received by a resident of an unauthorised colony in the National Capital Territory of Delhi, where the Central Government..regularised the transactions of such immovable property based on the latest Power of Attorney, Agreement to Sale, Will, possession letter and other documents .... in favour of such resident”.