GCCI calls for income tax law revisions to prevent double taxation in property sales

Panaji: Discrepancies in stamp duty valuation and double taxation on property transactions are creating hardships for buyers and sellers, said the Goa Chamber of Commerce & Industry (GCCI). GCCI urged Union finance minister Nirmala Sitharaman to tweak the income tax laws to relieve the real estate sector.

GCCI informed the Centre that the calculation of stamp duty by state authorities is not uniform and does not account for market factors such as location, amenities, and demand-supply dynamics. This lacuna, said GCCI president Shrinivas Dempo, creates practical difficulties for buyers and sellers, particularly in distress sales and transactions involving mortgaged land.

“Govt must align provisions of the Income Tax Act with actual market values to reflect fair transactions. The income tax provisions need to be rationalised to exclude double taxation,” said Dempo.

GCCI submitted a list of recommendations to Sitharaman and Ravi Agrawal, the chairperson of the Central Board of Direct Taxes (CBDT).

Dempo said that certain provisions of the Income Tax Act result in double taxation by taxing both the buyer and seller on notional incomes derived from stamp duty valuations, “contrary to established principles of direct tax laws.”

GCCI also said that the permissible variation of 10% between the transaction value and stamp duty valuation is insufficient to address discrepancies in property prices. Dempo said that the Centre must replace state-determined stamp duty valuations with more accurate market-reflective values. This should include an increase in the permissible variation limits.

“Addressing these issues will alleviate hardships faced by stakeholders in the real estate sector, reduce litigations, and promote ease of doing business. It will also provide a much-needed boost to first-time homebuyers and ensure fair taxation in property transactions,” said Dempo.