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Indian Tax Office Putting Property Deals Under the Microscope

by Mary Swire, Tax-News.com, Hong Kong

25 April 2011


Indians who have recently made a foray into the country’s booming property market should be aware that the tax office is keeping a close eye on property transactions following allegations of a large number of tax irregularities.

Registrars have to report property transactions of INR3m (USD67,000) and above, and then this data is matched with tax returns filed by individuals. Buyers are, however, under-reporting transactions to avoid registration costs, and sellers are trying to avoid a capital tax charge, particularly if they are planning to use the money to purchase a new property. Unsurprisingly, cash is reportedly being used in many deals, which makes it harder for the taxman to keep track.

Chairman of the CBDT, Sudhir Chandra, said this week: “We will review all property deals to find out whether any black money has changed hands …and action will be taken in appropriate cases”. He said that his department has been making effective use of new technology, and that the amount of newly reported but previously undisclosed wealth had increased considerably as a result.

Initially the exercise being undertaken by the Central Board of Direct Taxes (CBDT) will start in Delhi and the National Capital Region, comprising Gurgaon and Noida, and then will be spread across the rest of India. The department currently has data for 2009-10 and data for 2010-11 will be available by August.

TAGS: individuals | tax | India

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