New property tax to hit Bengal real estate sector: CREDAI
The central government has proposed a new tax on real estate transactions on the basis of assessed valuation of a property at the time of transfer.
Kolkata: The real estate sector in West Bengal would be hurt if a proposed tax on property sales is introduced in the Finance Bill 2013, the Confederation of Real Estate Developers' Association of India's (CREDAI) Bengal chapter said Wednesday.
This, according to CREDAI Bengal, is because valuation of properties by registration authorities in the state in many cases are much higher than their actual transaction values.
The central government has proposed a new tax on real estate transactions on the basis of assessed valuation of a property at the time of transfer, instead of levying a tax on the basis of sale price fixed when the project was initiated.
"In West Bengal, developers are largely affected due to the high valuation (of properties), which in lots of cases are more than the actual transaction price," CREDAI Bengal President Harsh Vardhan Patodia said here.
Developers said the impact of the proposed tax on the sector would be huge across India as they have to pay additional income tax on the income, which is "not actually earned" by them and similarly purchasers also have to pay taxes based on deemed income, which they have "never received".
According to them, the impact of the new tax would be "much greater" in Bengal as in many cities, including Kolkata, the actual value of property is much less than the valuation assessed by the stamp duty or registration authorities.
"The declared circle rate (for valuations) is much higher in the state and in some cases it goes up to 25 percent to 100 percent of transaction," Patodia said.
According to Patodia, if the state government did not rationalise the circle rate, real estate transactions would be impacted severely.
"The problem is across India. But if West Bengal does not rationalise the rate in certain areas, transactions will not take place, so the business will come to a standstill. This problem will be very peculiar to the state," he added. RBI to launch plastic currency notes soon