Union Budget 2021 | Amendments impacting Real Estate sector

In the Finance bill 2021- There are two proposed amendments in respect of the transfer of Immovable property below the Stamp duty Valuation (SDV) that will impact directly to the real estate sector.

With the object of improving the demand in the real estate sector, the Union budget proposes the following two amendments in respect of the transfer of immovable property:

Section. 43CA

It deals with the transfer of land or building or both (Other than capital asset). Section 43CA will applies when the transfer satisfies the below conditions

1. Condition.1 - Transfer of land or building or both
2. Condition.2 - Consideration received or receivable value on such transfer less than the value adopted, assessed or assessable by any authority or a State Government for the purpose of payment of stamp duty in respect of such transfer
3. Condition.3 - Stamp duty valuation is more than 110% of actual consideration

If both the above conditions are satisfied then Sec.43CA will applies and the value considered for stamp duty shall be deemed to be value of consideration

Amendment proposed in Sec.43CA: Section. 43CA will applies only when the stamp duty valuation is more than 120% of actual consideration with satisfying the below conditions

1. Transfer of asset should be residential property
2. Transfer takes place between 12^th November 2020 to 30^th June 2021
3. Transfer is first time allotment of residential property to any person
4. Consideration of transfer should not exceed Rs.2 Crore

Section. 56(2) (x)

It applies applies when any person receives any money or property during the previous year without consideration exceeds Rs.50, 000/-, then the whole of such amount is taxable in the hands of recipient under the head Income from other sources.

In case of transfer of immovable property and If the below conditions are covered then Sec.56(2)(x) will applies

1. Transfer of any immovable property
2. Without consideration - stamp duty value exceeds Rs.50,000/- or
3. With consideration less than the stamp duty value- the difference between the actual consideration value and stamp duty value exceeds Rs.50,000/-

With the above conditions are satisfied then Sec.56 (2) (x) will apply, but in case of transfer is less than the stamp duty value, then section.56 (2) (x) will apply only when the stamp duty valuation is more than 110% of actual consideration.

Amendment proposed in Sec.56 (2) (x): Section. 56(2) (x) will applies only when the stamp duty valuation is more than 120% of actual consideration with satisfying the below conditions

1. Transfer of asset should be a residential property
2. Transfer takes place between 12^th November 2020 to 30^th June 2021
3. Transfer is first time allotment of residential property to any person
4. Consideration of transfer should not exceed Rs.2 Crore