38.6c New Delhi, India, Wednesday, April 17, 2024

Income Tax Exemption by Government for residents of Unsanctioned Colonies in Delhi

By Prachi Misra      01 July, 2020 01:49 PM      0 Comments
Income Tax Exemption by Government

A big question of the unsanctioned property has been resolved by the Government by exempting the House owners from paying any tax. The Government last year legalized unsanctioned colonies in Delhi giving legal rights to the House owners. The Government has exempted the house owners from the prescribed income tax even if the property was purchased at the rate below the existing market price. As these properties were unsanctioned it may have been purchased by the people at a low rate fixed by the Government for registration of properties. After this, the Government has decided to give owners exemption from income tax. Before this exemption, there was a difference between fair market value and the actual purchase price.

The Central Board of Direct Taxes (CBDT) through a notification stated that this exemption would come in force from 1st April 2020 and would be applicable for the Assessment year 2020-2021 and subsequent years. 

The notification stated that “any immovable property, being land or building or both, received by a resident of an unauthorized 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 favor of such resident.”

In the present situation, tax is levied on the difference between market price and purchase price, if the property has been purchased at a lower rate than the stated rate. Nangia Andersen LLP, Partner Suraj Nangia stated that this is a distinctive case where the property must have been acquired by the owners long back by way of the power of Attorney or any other authorization and only such authorization has been regularised in the process of regularising the unsanctioned colonies.

Nangia further stated, “Therefore practically, all the acquisitions before that date of regularization have been tax exempted by way of the present notification, so that individual residents don’t have to pay tax on any notional income, even if FMV as on date of regularization is more of than the purchase price of such property.”

Almost 1700 unsanctioned were regularized last year in December after Parliament passed a law stating ownership rights to the people on the basis of Power of Attorney, Agreement of Sale, Will, or Possession letter. Since the purchase price was lower than the stated rate by the Government the owner would have been subject to income tax. 

The IT exemption given by CBDT through a notification dated 29th June 2020, exempts the owner of these properties from payment of tax on the difference between FMV and purchase price.

Share this article:

Leave a feedback about this

Trending Judiciary
To uphold presumption of guilt under Section 29 POCSO Act, foundational facts must be proved, reiterates Delhi HC [Read Judgment]

Delhi High Court reiterates that to uphold the presumption of guilt under Section 29 of the POCSO Act, the prosecution must prove the ‘foundational facts’ beyond reasonable doubt.

16 April, 2024 12:54 PM
Trending Judiciary
Baba Ramdev, Acharya Balkrishna offer to make public apology in SC for misleading advertisements

Baba Ramdev and Acharya Balkrishna offer public apology in SC for misleading ads, court deliberates acceptance.

16 April, 2024 01:57 PM


Trending Business
SC sets aside judgment upholding arbitral award against DMRC [Read Judgment]

Supreme Court overturns arbitral award favoring Reliance Infrastructure subsidiary against DMRC, citing grave miscarriage of justice.

11 April, 2024 11:43 AM
Trending Political NEWS
Delhi HC rejects third plea for Arvind Kejriwal's removal as Delhi CM, blasts petitioner for abuse of judicial process [Read Judgment]

Delhi High Court dismisses the third PIL plea before it seeking Aam Aadmi Party leader Arvind Kejriwal’s removal as Chief Minister of Delhi, imposes Rs. 50,000 cost on petitioner.

11 April, 2024 03:29 PM
Trending Judiciary
Use of social media to interfere with administration of justice needs serious consideration: SC [Read Judgment]

Supreme Court warns against social media misuse in legal matters, cautions against prejudicial posts interfering with justice.

11 April, 2024 05:44 PM
Trending Legal Insiders
Two-day conference on April 13-14 on Technology and Dialogue between SC and Singapore

Explore AI's role in law at the India-Singapore Supreme Court conference on technology, enhancing judicial processes and access to justice, April 13-14, 2024.

12 April, 2024 06:16 PM


Join Group

Signup for Our Newsletter

Get Exclusive access to members only content by email