October 3, 2023

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Is excessive circle charge unhealthy information for residence consumers?

3 min read
Photo: Mint

My mom, who’s retired, and I purchased an condo (on resale) in Gurgaon just lately. To our shock, the circle charge was a lot larger than the anticipated price of the property. While the circle charge put the price of the property at ₹91 lakh, we purchased the condo at ₹78 lakh (plus registry price as per circle charge).

What would be the tax legal responsibility for us each?

—Aman Kishore

It is assumed that the property has not been bought from a relative. As per the provisions of Section 56 of the Income Tax Act, the place the stamp responsibility worth (SDV) exceeds the acquisition consideration, the distinction shall grow to be chargeable to tax within the arms of the purchaser, if such distinction exceeds larger of the next quantities: ₹50,000 and an quantity equal to 10% of the acquisition consideration.

The stated distinction shall be taxable within the yr of buy, underneath the pinnacle ‘income from other sources’ on the relevant slab charges for the person.

In the moment case, the distinction between the SDV and the acquisition consideration being ₹13 lakh, is in extra of 10% of the acquisition consideration. Thus, this distinction shall be taxable in proportion to your respective share within the property.

In case you consider that the valuation adopted by the stamp valuation authorities exceeds the honest market worth of the property as on the date of switch; you might query the identical earlier than your jurisdictional assessing officer. In such case, the assessing officer might after due analysis refer the valuation of the property to a prescribed valuation officer. Where the worth ascertained by such valuation officer exceeds the worth assessed by the stamp valuation authorities, the worth so decided shall be thought of because the SDV.

I earned ₹9.5 lakh for fiscal yr 2021-22. Despite utilizing the home hire allowance (HRA), fairness linked financial savings schemes (ELSS) advantages, I needed to nonetheless forego over ₹20,000 in taxes. Will a part of this be refunded after I file the earnings tax return (ITR). I’ve not purchased any insurance coverage plan as of now. Will shopping for the identical assist?

—Name withheld on request

It is assumed that you’re referring to monetary yr (FY) 2022-23 and never FY 2021-22, because the due dates to file the tax return (each authentic and revised) for FY 2021-22 have already lapsed and therefore, no additional good thing about any deduction/exemptions may be claimed.

Assuming you’re a salaried particular person, if any of the eligible exemptions/deductions weren’t made earlier and/ or not thought of by way of your payroll withholdings, you continue to have an choice to make these investments previous to the top of the related monetary yr, i.e., 31 March and declare the identical out of your taxable earnings, whereas submitting your tax return for FY 2022-23.

Premium funds underneath a life insurance coverage plan could also be eligible as a deduction out of your taxable earnings underneath Section 80C of the Act, topic to satisfaction of prescribed circumstances and total deduction restrict.

Parizad Sirwalla is associate and head, international mobility providers, tax, KPMG in India.

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