Tax on property deals should be on market value recommends ICAI

Jun 17,NEW DELHI: In what could increase revenues for the government, the Institute of Chartered Accountants of India on Thursday said capital gains on property deals should be on the basis of market value rather than the present stipulation of stamp duties, which are often under-valued.


Seeking repeal of Section 50C of Income Tax Act used for computation of capital gains for property transfer, ICAI said since fixation of stamp duties is a state subject, there was a tendency to fix the duty rates at higher level, ignoring the market rate of the transferred property.

Section 50C provides for adopting value of stamp duty as fixed by the state governments for the computation of capital gains for income assessees.

Observing that guideline value of stamp duties was not fixed in a scientific manner by state government authorities, ICAI, in its pre-Budget memorandum, said IT assessees in Delhi and Kerala did not face much difficulty as these states have standard guidelines for stamp duty computation.

However, in states like Maharashtra, Andhra Pradesh and Tamil Nadu, the stamp duty norms for evaluating property value exceeded by 50 to 100 per cent over the actual sale value, it noted. "Confusion arises when the state authorities fix higher stamp duty rates in an attempt to generate more revenues for the exchequer, ignoring the market value of a land or building," an ICAI official said.


He cautioned that Central legislation relying on state guidelines, which are not uniform, affects harmonious implementation and leads to discrimination.