With the significant changes in tax laws, any cash transaction worth Rs 20,000 or above for sale or purchase in real estate, including agricultural land, is under income tax (I-T) scanner and they are liable to pay penalty with effect from June 1, 2015. However, tax experts believe that the Government’s move on this would ensure more transparency in the real estate businesses and wrong doers earning crores of unaccounted money involved in the litigation process will come to an end.
In order to curb the generation of black money by way of dealings in cash in immovable property transactions, section 269SS of the Income-tax Act has brought out some changes for the realty sector. As per the new tax law by Central Board of Direct Taxes (CBDT), which is effective from June 1 this year, any transaction in real estate, including agricultural land, shall be required to be made through account payee cheque or real time gross settlement(RTGS) or electronic funds transfer if the amount is Rs 20,000/- or above. If transaction is done in cash then penalty of an amount equal to such cash transaction will be imposed on seller who accepts cash or refund of advance is made in cash by the seller of property.
Agreeing the fact, a senior tax consultant and Chartered Accountant Rajesh Mehta said, “The Government’s move on this tax law is to ensure more transparency in sale and purchase systems in the real estate businesses. I think, there is huge black money involved in the litigation process by touts and middle men during any transaction of such land or property in the realty business. If they go by cheque or RTGS, then it would come on records and the transaction above the prescribed limit would liable for the penalty.”
“Most of the small and illiterate farmers in the country are not aware of this. So the poor farmers easily get trapped by the touts and fall prey to them. I think only such farmers are free from this transaction if both of them have agricultural income only and not any other income chargeable to income tax, for instance, both of them should not have any income like interest or rent or salary etc, even of one rupee, ie; he should not have even income of one rupee other than only agricultural income,” Mehta added.
Besides property transactions, so many other rules have been changed with effect from June 1 this year. To name a few, bank or cooperative bank and post office recurring deposits (RD) interest, will be liable to tax deducted at source (TDS), if it is more than Rs 10,000 per year. If PAN number is not given then the TDS will be 20 per cent.
Also the purchase transactions in consumer products like fridge, TV, car, jewellery can be made in cash or cheque but if it is more than Rs 1 lakh where the PAN number of buyer will have to be quoted. But, in case of jewellery if more than Rs 5 lakh and even a cash transaction of any amount therein, then TDS will be 1 per cent. The CBDT, however, has not yet made any circular or rule regarding quoting of PAN for transaction of movable properties exceeding Rs 1 lakh.
Till May 31, 2015, the I-T department has no power to process TDS return U/s 200A to levy TDS late fee U/s 234E but with effect from June 1, 2015, as per Sec. 200A, the I-T department can levy late fee of Rs 200 per day on delayed filing of TDS return. “So if any late fee is levied before June 1, 2015 can be filed for this or rectification application U/s 154 can be filed to get it cancelled. Now, if due to mistake any late fee is paid then refund will be granted of such excess late fee,” said Mehta.