Real Estate Related Amendments in Income Tax

Real Estate Related Amendments in Income Tax

Real Estate Bill 2013, Real Estate Bill India, Union budget 2013-14, Amendments in Income Tax, Real Estate Related Amendments in Income Tax, Finance Bill 2013, Income Tax Act.

The Finance Bill 2013 includes vital amendments in Income Tax Act for specifically related to Real Estate Sector. The topics related to Real Estate Sector which is affected due to amendments are as follows;

          (1)    Change in the Definition of agricultural land and agriculture income

          (2)    Consideration in case of immovable property held as stock in trade which is sold below stamp value

          (3)    Taxation on Immovable property transfer for inadequate consideration

          (4)    TDS on Transfer of immovable property other than agricultural land, and

          (5)    Interest on housing loan

The above amendments in the income tax act, 1961, are the current need of the economy.

      (1)    Amendment in the definition of Agricultural Land and Agriculture Income

The Central Government amended the law in Agricultural Land under section 2(14)(iii), Agriculture Income under section  2(1A)(c) of the Income Tax Act, 1961, and under section 2(ea) clause (b) explanation 1 in the Wealth Tax Act, 1957, 

Prior to amendment u/s 2(14)(iii)

Agricultural land in India, not being land situate -

(a)  in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand according to the last preceding census of which the relevant figures have been published before the first day of the previous year; or

(b)  in any area within such distance, not being more than eight kilometers, from the local limits of any municipality or cantonment board referred to in item (a), as the Central Government may, having regard to the extent of, and scope for, urbanisation of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette

After the amendment provision for classifying the agriculture land is as follows;

“… in any area within the distance, measured aerially,—

(I) not being more than two kilometers from the local limits of any Municipality or Cantonment Board and which has a population of more than ten thousand but not exceeding one lakh;; or

(II) not being more than six kilometers, from the local limits of any Municipality or Cantonment Board and which has a population of more than one lakh but not exceeding ten lakh; or

(III) not being more than eight kilometers, from the local limits of any Municipality or Cantonment Board and which has a population of more than ten lakh”.

The Income from the Farm House situated in the above amended definition of the agricultural land will not be considered as Agricultural Income, if such land is not assessed to Land Revenue.

The definition of term “Asset” for the purpose of charging Wealth Tax under section 2(ea), also includes above Urban Agricultural Land for the purpose of calculation of the Wealth of the assessee.

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