Stamp Duty Valuation For Buying Property Will Not Be Taxing Now! -Tax Simplification Committee Recommends Deletion of Section 56(2)(vii)(b)(ii) !

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If I can recall on amendment that the previous government brought that was illogical and unconstitutional in my opinion then I would select the tax on the basis of stamp duty valuation for buying immovable property. Under this provision , if you buy property, the difference between the paid price as written in the agreement and the valuation for stamp duty purpose is deemed as income from other sources under section 56(2)(vii)(b)(ii) of the Income Tax Act. The underlying thought was that the common citizen are paying consideration for buying property out of black money. But note that companies are not included for application of section 56(2)(vii)(b)(ii) . How illogical and convenient for the politician knowing fully well that all the money made out of 2G and Coal Block scheme were done through the private limited companies. 

Fortunately, the Tax Simplification Committee (TSC) has recommended for the deletion of the provision u/s 562)((vii)(ii)(b) of the Income Tax Act . The report says This   presumption   is   not   in   accordance   with   judicial interpretation and therefore deserves to be deleted.”

TSC Report on Non Application of Stamp Duty Valuation for Buying Property

7.1 DELETION OF  SECTION 56(2)(vii)(b)(ii)

The existing  provisions  of  section  56(2)(vii)(b)(ii) provide  that where any immovable  property is  received  for a consideration  which is  less  than the stamp duty value  of  the property by  an amount exceeding  50,000, the stamp duty value  of  such property as exceeds such consideration, shall be chargeable  to tax in the hands  of the individual or HUF as income from other  sources.  This  provision  works on the  assumption  that the buyer of the property would have paid consideration more than the stated consideration.   This   presumption   is   not   in   accordance   with   judicial interpretation and therefore deserves to be deleted.

7.2  Hence, it  is  proposed that  section  56(2)(vii)(b)(ii)  be  deleted w.e.f. 1.4.2017.