CASH TRANSACTIONS OR PAYING CASH OR RECEIVING CASH FOR THE SALE AND PURCHASE OF PROPERTIES


It is strongly advised to avail the services of a professional Chartered Accountant to make CASH Payments.  All the payments towards the purchase of the property must be THROUGH AN ACCOUNT PAYEE DEMAND DRAFT OR CHEQUE OR NEFT OR RTGS.

Cash transaction above a particular limit is not permitted.  Therefore, it is better to avoid the CASH transaction in view of the safety of both the parties.

PETROL PUMP STATIONS – DEPOSITED MONEY (OLD CURRENCY) – ACCOUNTS ARE BEING CHECKED BY THE INCOME TAX AUTHORITIES. 16.70 Bank accounts under investigation.


The Income Tax Department is scrutinising the Books of Accounts and the bill books maintained by the Petrol Pump Stations across India, which had deposited more old currency during the demonitisation.

The Income Tax Department has also found out abnormal discrepancy in 16,70,000 accounts with huge deposits and are under scrutiny.

It is ACHCHE DIN FOR THE HONEST TAX PAYER.  

Income Tax officials raid the homes of jewelers in 8 places in Chennai, recover Rs.90 crores in cash and Rs.29 crores jewellery


The department has been conducting regular raids since notes ban on Nov 8 Till December 6, cash and jewelry worth Rs. 120 crore (90+29=119)had been seized. The officials of the Income Tax department raided the homes of jewellers and sand miners in Chennai and recovered Rs. 90 crore in cash and 100 kg gold today. Raids have been conducted at eight places in the city, sources said.

Of the seized cash, Rs. 70 crore were in new notes, Rs. 20 crore in the banned old notes of Rs. 500 and Rs. 1,000, sources said.
Till December 6, cash and jewellery worth Rs. 130 crore had been seized and Rs. 2,000 crore of undisclosed wealth admitted by taxpayers, the department said.
The value of the gold seized today is Rs. 29 crore.

Further the investigating agencies, is stated have been examining the amounts deposited in the Bank Accounts worth Rs.11.55 lakh crores.

The amounts deposited without proper accounts and in benami names will attract the penal provisions of Benami Property Act.

 

REGISTRATION VALUE OR THE GUIDANCE VALUE OF THE PROPERTIES REGISTERED – TAX EVASION – PENALTIES – TAX EVADERS GOT RED HANDED – RBI -INCOME TAX DEPARTMENT – STAMPS AND REGISTRATION DEPARTMENT – STAMP DUTY EVASION – PENALTY – 10 TIMES THE TAXES EVADED


In a bid to reduce or evade the stamp duty at the time of registration, the buyers and the sellers of the properties, have not SHOWN  the real sale price or consideration in the registered sale deed, but 90% of the buyers have borrowed money or availed institutional finance under HOME LOAN scheme, have falsified or deliberately undervalued the properties during the REGISTRATION PROCESS.

The Reserve Bank of India, being the central bank, governing all the banks in India, has all the details about the SALE AGREEMENT,(based on the sale agreement, the housing loans are sanctioned by the banks) and the SALE DEED.  It is very easy to detect the discrepancy or the undervaluation.

STAMP DUTY evasion invites 10 times the penalty of the STAMP DUTY EVADED, while, misrepresenting or concealing the actual consideration will invite CHARGES under several ACTS.

The Income Tax department has detected many such illegal transactions and are investigating too many such cases across the country and it is reported that over 30% of such tax evasion, misrepresentation and tax evasion are all in properties across BANGALORE alone.

Await the Tax Sleuths at your door steps soon for those who have different values in the SALE AGREEMENT and registered the property for LESSER VALUE in the SALE DEED.

REGISTRATION OF PROPERTIES AT A VALUE LESSER THAN THE ACTUAL SALE VALUE OF THE PROPERTY TO EVADE STAMP DUTY AND INCOME TAX


A News Report of real estate transaction in Bangalore Mirror on 13-07-2016

Woman entered into a deal to sell her property, but faced trouble when buyer refused to pay the ‘remainder’ 

The High Court of Karnataka has allowed a 75-year-old property owner to initiate a cheating case against the buyers of her property who allegedly refused to pay her the amount that was negotiated for. The property was registered for a lesser amount than what was mutually agreed, as is the norm with most property registrations. But in this case, the purchaser allegedly refused to pay the ‘remaining’ amount while paying her only the amount mentioned in the sale deed.

An US national came to Bengaluru to sell her property in 2013 and entered into an agreement to sell with  for a consideration of Rs 2 crore. However, this transaction did not fructify. Later, an agent got her a deal to sell the property to one  XXXXXXXXXXXXfor Rs 6,58,20,000. However, the sale deed for registration was prepared only for Rs 4,32,20,000.

The Landlady alleges that she was not paid the difference amount and hence she refused to give up possession of her property.

She complained to the  police that she was being forced to give up possession of the property without the balance amount being paid to her. The police did not register an FIR but gave her an ‘endorsement’ that it was a civil dispute and hence she should approach the court.

Thereupon, she approached a civil court, which refused to give an injunction against the property purchasers and she claimed that she was forcibly thrown out of the property and then approached the HC for justice.

The HC noted that there was “some semblance of criminal intention on their part.” of the buyers,  It also castigated the police for not filing an FIR. “This court is unable to understand as to how the  police could refuse to register the complaint and issue such an endorsement.” The court said the case was unnecessarily being pursued in the civil court.

Relegating the case to the magistrate court  and directing the seller “to file appropriate complaint and seek appropriate direction to the jurisdictional police for investigation and registration of the complaint for the offences alleged against the defendants”, the court also allowed her to proceed against the purchasers to recover the amount due to her.

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REMARKS-

UNDERVALUING THE PROPERTY – STAMP DUTY EVASION – INCOME TAX IRREGULARITY – CAPITAL GAINS – PENAL PROCEEDINGS – REPATRIATION OF FUNDS ABROAD

Income Tax Department might step in along with the Department of Stamps and Registration to conduct an enquiry into the TAX – for the difference amount.  Amount negotiated and the Amount shown in the Sale Deed.  The difference of stamp duty + 10 times the penalty and the Income Tax + Capital Gains + Penal proceedings from the IT Investigation Wing.

If the property is bought for X price and registered it for Y price, to evade stamp duty and Income tax, both the departments will have conduct enquiry and the amount `Y` has to be assessed to tax.

The liability towards the stamp duty is the DUTY NOT PAID OR EVADED on the OTHER amount Plus 10 times the penalty and the income tax (TDS) + recovery proceedings by the IT department.


There are many financial institutions provide home loans and some of them by-pass the RBI directives and assist the buyer and seller to EVADE stamp duty.  This is not very difficult to investigate.  The actual sale agreement is for Rs.1,00,000/- and the loan sanctioned is also on the basis of the sale agreement and 75% or 80% of the value shown in the Sale Agreement.

But, the SALE DEED registered is for Rs.50,000/- by undervaluing the property and EVADE STAMP DUTY.

The penal proceedings:

STAMP DUTY HAS TO BE PAID FOR THE DIFFERENCE AMOUNT OR TAX EVADED AMOUNT OF Rs.50,000/- at the prevailing applicable rates and 10 times the penalty of the TAX EVADED AMOUNT.

If this discrepancy or illegality is brought to the notice of the RBI, the RBI might be compelled to initiate appropriate proceedings against the bank or financial institution and direct the BANK to proceed with the immediate recovery of the amount LENT to the borrower.

 

PROPERTY GUIDANCE VALUE REVISED OR INCREASED IN BANGALORE URBAN AND RURAL DISTRICT WITH 15 DAYS NOTICE TO FILE OBJECTIONS


The State Government has increased the Guidance Value or the Circle Rates or the Market Price of the property in Bangalore Urban, Bangalore Rural District and Ramnagar District with 15 days notice to submit the objections, if any, with supporting documents or evidence.

In some areas, the increase is very steep and on an average the increase is around 10% only.  The consequent effect will be strain the buyers.  With this increase, the Income Tax, VAT, Service TAx and Capital Gains tax will also goes up, indirectly.

The Income Tax department is also scrutinising many transactions, wherein the buyers in collusion with the sellers/agents/builders have underquoted the property consideration below the guidance value.  The department may initiate penal action on such buyers and sellers soon. The Guidance Value is treated as the Fair Market Value.  The property value or consideration must not be less than the guidance value as per the Finance Act.

INCOME TAX RETURN FILING- DATE EXTENDED TO 07-09-2015


The Finance Ministry has notified that the last day for filing income tax returns has been extended to 07-09-2015.

BUYING A PROPERTY WITH CASH – TRANSACTIONS ABOVE RS.20,000/- MUST BE ONLY THROUGH CHEQUES AND DEMAND DRAFTS.


THE GOVERNMENT HAS FINALLY COME OUT WITH A NOTIFICATION RESTRICTING THE TRANSACTIONS IN THE PROPERTY IN TERMS OF CASH BY PERMITTING IT TO RS.20,000/-. ANY AMOUNT PAYABLE OR TO BE PAID MUST BE ONLY THROUGH AN ACCOUNT PAYEE CHEQUE/DEMAND DRAFT/PAY ORDER/BANK TRANSFER/RTGS.

THE TRANSACTION IN CASH INVOLVES HIGH RISK AND THE BUYER WILL BE AT THE MERCY AND  in THE CLUTCHES OF THE SELLER/AGENT/BROKER AND THERE IS ALWAYS A CHANCE FOR THE INCOME TAX SCRUTINY.

IT IS ADVISED TO TRANSACT ONLY THROUGH BANK TRANSFER/ACCOUNT TRANSFER/RTGS/DEMAND DRAFT AND CHEQUES TO AVOID FRAUD AND BLACKMAIL BY THE SELLER AND HIS AGENTS.

CONVERSION OF BLACK MONEY/ASSETS STASHED ABROAD WITHIN 30-09-2015 AND GET AMNESTY – A NEW SCHEME TO BRING THE BLACK MONEY ABROAD !!


Dates For Compliance Window Under Black Money Act Notified; 30th September, 2015 is the date on or before which A Person may make a Declaration in respect of an Undisclosed Asset Located Outside India Under the Compliance Provisions of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015;

Last Date by which a Person must pay the Tax and Penalty in Respect of the Undisclosed Foreign Assets so Declared shall be the 31st December, 2015.

The Central Government has notified the 30th day of September, 2015, as the date on or before which a person may make a declaration in respect of an undisclosed asset located outside India under the compliance provisions of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (‘Black Money Act’).

The last date by which a person must pay the tax and penalty in respect of the undisclosed foreign assets so declared shall be the 31st day of December, 2015.

Detailed features of the compliance window are notified separately.

This is in tune with the announcement made by the Union Finance Minister Shri Arun Jaitley, in his Budget Speech this year, that a comprehensive new law to deal with black money stashed away abroad would be enacted. The Bill to enact the proposed new law was passed by the Parliament in its Budget Session. The Bill received Presidential assent and became law on 26th May, 2015. The Act provides for separate taxation of undisclosed foreign income and assets. Stringent penalties and prosecution, including rigorous imprisonment upto ten years and penalty equal to three times of the tax have been prescribed for violation. The Act also provides a compliance window for a limited period to persons who have undisclosed foreign assets which they have not disclosed for the purposes of Income-tax so far.

REBATE OF RS 2000 FOR INDIVIDUALS HAVING TOTAL INCOME UPTO RS 5 LAKH [SECTION 87A]


REBATE OF RS 2000 FOR INDIVIDUALS HAVING TOTAL INCOME UPTO RS 5 LAKH [SECTION 87A]

Finance Act 2013 has provided relief in the form of rebate to individual taxpayers, resident in India, who are in lower income bracket, i. e. having total income  not exceeding Rs 5,00,000/-. The amount of rebate is Rs 2000/- or the amount of tax payable, whichever is lower. The Provision is applicable for A.Y. 2014-15 of F.Y. 2013-14.

The section reads thus:

Rebate on educational expenses in certain cases.

87A. [Omitted by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1968.]

The following section 87A shall be inserted after section 87 by the Finance Act, 2013, w.e.f. 1-4-2014

Rebate of income-tax in case of certain individuals.

87A. An assessee, being an individual resident in India, whose total income does not exceed five hundred thousand rupees, shall be entitled to a deduction, from the amount of income-tax (as computed before allowing the deductions under this Chapter) on his total income with which he is chargeable for any assessment year, of an amount equal to hundred per cent of such income-tax or an amount of two thousand rupees, whichever is less.

 

A new section 87A by Finance bill 2013 has been introduced for Income Tax Deduction of Rs. 2000/- for Assessment Year 2014-15. This rebate can be availed Tax payer/Assessee under section 87A. It is necessary to read clauses 19 and 20 of the bill to make it more clear-

Clauses 19 and 20 of the Bill seek to amend section 87 and insert a new section 87A in the Income-tax Act relating to rebate of income-tax in case of certain individuals.

The proposed new section 87A seeks to provide that an assessee, being an individual resident in India, whose total income does not exceed five hundred thousand rupees, shall be entitled to a deduction, from the amount of income-tax (as computed before allowing the deductions under Chapter VIII of the Income-tax Act) on his total income with which he is chargeable for any assessment year, of an amount equal to hundred per cent of such income-tax or an amount of two thousand rupees, whichever is less.

Consequential amendments have been proposed in section 87, so as to provide reference to proposed new section 87A.

  • These amendments will take effect from 1st April, 2014 and will, accordingly, apply in relation to the assessment year 2014-15 and subsequent assessment years.
  • Rebate is available only to RESIDENT individuals
  • No rebate to Non Resident.
  • If the total tax payable is less than Rs. 2000/-, rebate is restricted to “total tax payable”.
  • Rebate benefit is not applicable to a super senior citizen, since he is already fully exempted up to Rs. 5 lakh.
  • Above amendment does not mean that basic Exemption Limit has been raised from Rs. 2,00,000/- to Rs. 2,20,000/-.

 

Online Monitoring of Evasion of Taxes in India


Under the provisions of the Prevention of Money Laundering Act, 2002 and the rules framed there under, it is the responsibility of the banks and other financial institutions to detect suspicious transactions and report such transactions to the Financial Intelligence Unit-India (FIU-IND) under the Ministry of Finance. FIU-IND is responsible for receiving and analysing such Suspicious Transaction Reports (STRs) and disseminating information to relevant intelligence and law enforcement agencies. FIU-IND has established an information technology based mechanism for online filing Suspicious Transactions Reports (STRs) and other statutory reports and for online dissemination of the information to the intelligence and law enforcement agencies.

The STRs received by FIU-IND from the banks and other financial institutions are disseminated by it to various intelligence and law enforcement agencies including agencies administering direct and indirect taxes for taking further action. However, information disseminated by FIU-IND may or may not lead to detection of evasion of direct and indirect taxes. Moreover separate data with regard to evasion of direct and indirect taxes detected by various enforcement agencies on the basis of information shared by FIU-IND is not maintained.

Through the mechanism of Economic Intelligence Council and Regional Economic Intelligence Councils, various law enforcement agencies share information and coordinate action relating to various economic offences, including tax evasion.

 

DCI Search and Seizure Operations Reveal Undisclosed Income of Rs. 438 Crore

 

The Directorate of Criminal Investigation (DCI) was created vide Notification dated 30th May, 2011 and 19th August 2011 to perform functions in respect of criminal matters having any financial implications punishable as an offence under any direct tax law including inter-alia:

• Chapter XXII of the Income Tax Act, 1961 (Act 43 of 1961); and
• Chapter VIII of the Wealth Tax Act, 1957 (Act 27 of 1957).

The Government is satisfied with the functioning of the Directorate.

The DCI has been playing pivotal role in collection, collation and dissemination of intelligence for use by difference wings of the Income Tax Department in proceedings under direct tax laws apart from undertaking investigation in specified categories of cases including information received under exchange of information protocols from other countries.

Major part of the information collected is through the mechanism of annual Information Returns (AIR) and Central Information Branch (CIB). Such information is utilized inter-alia for computer aided selection of scrutiny cases.

Besides, the DCI has conducted search and seizure operations in 8 cases in which undisclosed income admitted was to the tune of Rs. 438 crores (aprox.).

Further, the DCI in association with Directorate of systems undertook a pilot project named ‘Non-filers Monitoring System’ in February-March 2013 with encouraging results in terms of both widening and deepening of the tax base.

The DCI has also undertaken various other projects including enquiries under direct taxes laws into allegations of violations of KYC norms by several banks, having impact on evasion of direct taxes.

Various steps have been taken to strengthen the intelligence related functions of DCI. These include legislative and administrative interventions including rationalization of CIB/AIR codes to make the functioning of the Directorate more effective. DCI’s structures would also get suitably augmented with implementation of ongoing cadre restructuring of the Income Tax Department.

The ISSUES the buyer may face to implement this TDS provisions – The rate of 1% may increase to 20% if seller does not provide PAN due to overriding provision of section 206AA of ITA.


  • Obtaining TAN number for complying with the provisions;
  • Issuance of TDS certificate to the seller;
  • Filing of TDS return quarterly and mention PAN of the seller;
  • Taxes needs to be deposited within the specified time limit with the Government; and
  • May be scrutinized by the TDS officer

The rate of 1% may increase to 20% if seller does not provide PAN due to overriding provision of section 206AA of ITA.

TDS ON PROPERTY TRANSACTION FROM 01-06-2013


TAX DEDUCTED AT SOURCE (TDS) ON THE PROPERTY TRANSACTIONS ABOVE THE VALUE OF RS50 LAKHS IS EFFECTIVE FROM 01-06-2013, A NOTIFICATION TO THIS EFFECT IS PLACED BY THE INCOME TAX DEPARTMENT.  THIS NOTIFICATION IS NOT APPLICABLE TO AGRICULTURAL LANDS.

ONLINE TDS PAYMENT IS AVAILABLE AND THOSE, WHO CANNOT ACCESS IT, CAN MAKE/DEPOSIT THE TAX IN THE AUTHORISED BANKS.

THE VALUE OF THE PROPERTY IS CONSIDERED ON THE GUIDELINE VALUE PUBLISHED BY THE DEPARTMENT OF STAMPS AND REGISTRATION OR THE CONSIDERATION AMOUNT, WHICHEVER IS HIGHER.

NOTICE TO OVER 1,75,000 INCOME TAX ASSESSEES WHO HAVE NOT FILED THEIR INCOME TAX RETURNS


THE INCOME TAX DEPARTMENT HAS IDENTIFIED 12 LAKH NON-FILERS AND HAVE STARTED THE EXAMINATION OF THE DATA AND HAS ISSUED 1,75,000 NOTICES AND MORE IS EXPECTED SOON.

The Income Tax Department has also initiated a Data Warehouse and Business Intelligence (DW & BI) Project to develop an integrated platform for effective utilisation of information to promote voluntary compliance and deter non-compliance

HOME LOANS AND RBI DIRECTIVES – TAX EVASION BY THE BUYERS IS UNDER SCRUTINY


RBI HAS DIRECTED ALL THE BANKS NOT TO OVER VALUE THE PROPERTIES WHICH INCLUDES STAMP DUTY, REGISTRATION FEE, SERVICE TAX, VAT AND OTHER ADDITIONS, WHILE PROCESSING THE HOME LOANS, AS THE REGULATOR RECEIVED COMPLAINTS OF SUCH DISCREPANCIES BY SOME OF THE BANKS.

THE INCOME TAX DEPARTMENT IS EXAMINING THE HOME LOANS APPLICATIONS AND SANCTIONS AS IT IS NOTICED THAT MANY ASSESSEES HAVE FILED THE TAX RETURNS, WHICH HAVE SOME UNDISCLOSED TRANSACTIONS, TO AVOID THE PAYMENT OF TAXES.  

THE BUYERS ENTER INTO AN AGREEMENT OF SALE WITH THE BUYER FOR XXXXX PRICE AND SUBMIT THE SAME FOR HOME LOAN SANCTION AND REGISTER THE SAME PROPERTY FOR THE LESSER VALUE TO AVOID OR EVADE INCOME TAX, STAMP DUTY AND REGISTRATION FEE.  THE INCOME TAX DEPARTMENT IS COLLECTING INFORMATION OF SUCH TRANSACTIONS AND TAX EVADERS WILL BE PENALISED.  THEHOME LOAN BUYERS ENTER INTO A SALE AGREEMENT FOR THE ACTUAL VALUE OF THE  PROPERTY OR HIGHER VALUE OF THE PROPERTY TO AVAIL LOANS AND AT THE TIME OF REGISTRATION, REGISTER THE SAME FOR LESSER VALUE TO EVADE INCOME TAX, SALES TAX, SERVICE TAX, STAMP DUTY AND REGISTRATION FEE. 

 

PROPERTY BUYERS WHO HAVE AVAILED LOAN HAVE ALSO ENTERED INTO SEVERAL DUBIOUS AGREEMENTS AND THE BUILDERS COLLECT THE PAYMENT UNDER VARIOUS HEADS AND IN DIFFERENT NAMES, BUT ARE CAUGHT, AS THEY HAD ENTERED INTO THE AGREEMENT OF SALE AND THESE ARE OFFICIALS DOCUMENTS, BASED ON THESE DOCUMENTS THE LOAN IS SANCTIONED.

SERVICE TAX


SERVICE TAX SLABS AND PAYMENT DUE DATES

1   In case of Individuals or Proprietary Concerns and Partnership Firm, service tax is to be paid on a quarterly basis. The due date for payment of service tax is the 5th of the month immediately following the respective quarter (in case of e-payment, by 6th of the month immediately following the respective quarter). For this purpose, quarters are: April to June, July to September, October to December and January to March. However, payment for the last quarter i.e. January to March is required to be made by 31st of March itself.

( Refer Rule 6 (1) of Service Tax Rules, 1994)

2     In case of any other category of service provider other than specified at 6.1 above,  service tax is to be paid on a monthly basis, by the 5th of the following month ( in case of e-payment, by 6th of the month immediately following the respective month). However,  payment for the month of March is required to be made by 31st of March itself.      

( Refer Rule 6 (1) of Service Tax Rules, 1994)

3     Service tax is to be paid to the Central Government in respect of service deemed to be provided as per the rules framed.

( Refer Rule 6 (1) of Service Tax Rules, 1994)

4      The facility of e-payment of service tax has been introduced with effect from 11.05.2005. From 1stApril, 2010 e-payment of service tax has been made mandatory for the assessees who have paid service tax of Rs.10 Lakhs (cash+ cenvat) and above during the last financial year or who have paid service tax of Rs.10 Lakhs (cash + cenvat) and above during the current financial year. The e-payment shall be made only in designated banks by 6th day of the following month.

(Refer Rule 6 (1) & (2) of Service Tax Rules, 1994) {List of Banks, authorized to accept e-payment is given in para 12)

5   The assessee is required to deposit the amount of service tax in the designated banks through GAR-7challan.

(Refer Rule 6 (2) of Service Tax Rules, 1994)

 ( Assessees may contact jurisdictional office for details of the designated banks.)

6     While depositing the service tax, the appropriate ‘account head’ pertaining to the particular service category should be mentioned on the challan. The correct accounting heads have been given in the table showing the ‘List of Services’ in para 1.3.

7      If the assessee deposits the amount of tax liable to be paid, by cheque, then the date of presentation of the cheque to the designated bank would be treated as the date of payment of service tax.

(Refer Rule 6 (2A) of Service Tax Rules, 1994)

8       Where an assessee has issued an invoice, or received any payment, against a service to be provided which is not so provided by him either wholly or partially for any reason, or where the amount of invoice is renegotiated due to deficient provision of service, or any terms contained in a contract the assessee may take credit of such excess service tax paid by him, if the assessee:-

          a) has refunded the payment or part thereof, so received for the service provided to the person from whom it was received or

          b) has issued a credit note for the value of the service not so provided to the person to whom such an invoice has been issued

( Refer Rule 6 (3) of Service Tax Rules, 1994)

9     The assessee can opt for provisional payment of service tax in case he is not able to correctly estimate the tax liability. In such a situation he may request in writing to the jurisdictional Assistant / Deputy Commissioner for the same.

( Refer Rule 6 (4) of Service Tax Rules, 1994).

10    Service tax ( including interest, penalty, refund) is to be rounded off to the nearest rupee. 50 paise or more should be rounded off to the next rupee and less than 50 paise should be ignored.

( Refer Board’s Circular No.53/1/2003 dated 11.03.2003)

11    Any person who has collected any sum on account of service tax, is under obligation to pay the same to the Government. He cannot retain the sum so collected with him by contending that service taxis not payable.

( Refer section 73A of the Finance Act, 1994.)

12. Any person providing taxable service to any person shall pay service tax at the rate specified in Sec.66 in such a manner and within such period as may be prescribed.

(Sec.68 of the Finance Act, 1994)

The table below shows the rate of service tax applicable at the relevant period of time.

Sr.No. Period Rate ofService Tax Rate of Education Cess Rate of  Secondary & Higher Education Cess
1. Till 13.05.2003 5% Nil Nil
2. 14.05.2003 to 09.09.2004 8% Nil Nil
3. 10.09.2004 to 17.04.2006 10% 2% of the S.T. Nil
4. 18.04.2006 to 31.05.2007 12% 2% of the S.T. Nil
5. 01.06.2007 to 23.02.2009 12% 2% of S.T. 1% of S.T.
6. From 24.02.2009 10% 2% of S.T. 1% of S.T.

 

MISCONCEPTION ABOUT THE MARKET PRICE AND GUIDANCE VALUE


THE SELLERS ARE IN GREAT MOOD HOPING THAT THE PRICES OF THE PROPERTIES HAVE GONE UP WITH THE REVISION OF GUIDANCE VALUE.  THIS IS A MISCONCEPTION. IN REALITY, THERE WILL NOT BE GOOD DEMAND FOR THE PROPERTIES DUE TO THE REVISION AND INCREASE.

THE REASONS ARE:

THE SELLERS HAVE TO PAY ADDITIONAL STAMP DUTY AND REGISTRATION FEE TO THE EXTENT OF THE INCREASED VALUE.

THE SELLERS MUST ALSO HAVE INCOME TAX (ACCOUNTED MONEY) TO THE TUNE OF THE GUIDANCE VALUE.

NORMALLY ALL THE PROPERTIES ARE UNDERVALUED TO EVADE STAMP DUTY AND REGISTRATION FEE AND THE MOST IMPORTANT ASPECT IS THAT THE INCOME TAX DEPARTMENT TREATS OR ASSESSES THE VALUE OF THE PROPERTY AS PER THE GUIDANCE VALUE OR THE GOVT VALUE OR IF THE VALUE OR CONSIDERATION IS PAID ABOVE THE GOVT/GUIDANCE VALUE AND NOT FOR THE VALUE SHOWN IN THE SALE DEED.

IN CASE, IF THE SALE VALUE OR CONSIDERATION SHOWN IS LESS THAN THE GUIDANCE/GOVT VALUE, THE INCOME TAX DEPARTMENT WILL LEVY PENALTY AND ASSESS IT TO THE TAX PURPOSE AT THE GUIDANCE VALUE.

DUE TO THE AFORESAID FACTORS, THE PRICES WILL NOT INCREASE BUT WILL DEFINITELY HAVE A DISCOURAGING TREND. 

WITH THE REVISION ALL THE REVENUE AND(GOLMA)L PROPERTIES WITH( BOGUS) GPA ARE IN QUANDRY.  EVEN, IF THEY UNDERGO SURGERY UNDER AKRAMA-SAKRAMA, THE PENALTY WILL BE BASED ON THE GUIDANCE VALUE.  IF ANY OF THESE GPA PROPERTIES HAD TO BE REGISTERED NOW, IT WILL BE AT THE NEW REVISED GUIDANCE VALUE.

PROPERTY REGISTRATION EXPENSES SHOOTS UP BY 1% TO 15%


DUE TO THE REVISION OF GUIDANCE VALUE, THE STAMP DUTY AND THE REGISTRATION FEE( CHARGES) PAYABLE BY THE BUYER HAS GONE UP BY 1% TO 15% DEPENDING UPON THE QUANTUM OF REVISION. 

GENERALLY, 90% OF THE PROPERTIES REGISTERED ARE ALWAYS UNDERVALUED. 

ONLY THOSE SEEKING LOANS FOR THE PURCHASE WERE REGISTERING IT AT THE MARKET VALUE SO AS TO GET THE MAXIMUM LOAN, THUS WERE THE ONLY BUYERS WHO WERE HONEST(DUE TO COMPULSION TO AVAIL THE LOAN) DID NOT EVADE THE TAXES.

THE INCOME TAX DEPARTMENT IS CONDUCTING AN ENQUIRY INTO THE HIGH VALUE PROPERTIES AND TRANSACTIONS.

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