CAPITAL GAINS TAX NIL - EXEMPTION ON 1% TDS ON SALE OF IMMOVABLE PROPERTY

Respected Shri P Chaidambaramji,

With regards to the introduction of the new section, 194-IA and the further Notification dated 31st May, 2013, I would like to state that it has dealt a body blow to those first time home owners who have religiously planned it for years together, not just their financial plans but plans to comply with the Income Tax laws of the land into disarray and will prove a dampener for those who have adopted honest practices such as compliance with the laws of the land against those land sharks and real estate dealers who previously and in future also, in spite of your good-intentioned amendment on TDS, will thrive with their black money transactions. In short, an honest and law-abiding citizen like me would be hit hard by the amendment 194IA whereas the black money transactions and those indulging in tax avoidance would never be affected thus defeating the main objective of introducing this amendment which is to check tax avoidance, though the tax base may be widened at the expense of honest tax payers like me and in contradiction to the capital gains tax exemptions specified in section 54 of the Income Tax Act. Also please imagine the financial burden that would be heaped on an about to retired or a retired person who may be planning to sell his ancestral property somewhere else so as to build a home at his current, urban work place and settle down for good.

Even in case of interest earned through bank fixed deposits or in terms of salaries earned, declarations such as Form 15G/15H or tax-saving instruments would certainly reduce the amount of TDS that would be deducted from such incomes by the respective authorities.

In the same breath, a similar declaration should be notified sooner rather than later, as this new notification is really proving to be a burden for many sellers who insist on declaring the entire amount to the IT department and plan to avail the capital gains exemptions of section 54.

With the above in perspective, I would like to strongly reiterate that if a declaration as to the exemption of capital gains tax as per section 54 is not announced and notified in line with various declarations such as form 15G/15H, form 10BA etc, for claiming exemptions/deductions, than the new amendment might push even for honest tax payers and law-abiding citizens also towards under-valuation of their properties, thus defeating the main objective of the new amendment, viz. “widening of tax base and to check tax avoidance measures”.

So, I sincerely request your kind self through this correspondence to urgently look into the matter of those who are planning to avail the benefit of section 54 and issue a notification towards a declaration that capital gains tax would be nil, so that such tax payers/sellers are not required to lose 1% of their sale consideration through TDS, albeit for 3 years or more.

Yours Sincerely,

Adarsh R Iyer

Bangalore