In a major relief to Home Buyers in the country, the union government extended the timeline for claiming Income Tax Exemption on the investment made in a residential house till September 30, 2021.
The Finance Ministry said that the compliances to be made by the taxpayers such as investment, deposit, payment, acquisition, purchase, construction, or such other action, by whatever name called, for the purpose of claiming any exemption under the provisions contained in Section 54 to 54GB of the Act, for which the last date of such compliance falls between 1st April 2021 to 29th September 2021 (both days inclusive), may be completed on or before 30th September 2021.
First time home buyers could avail special tax relief on investment in residential houses as per specified conditions. The deadline for making this investment in a residential house for tax deduction has been extended by more than 3 months from the earlier deadline of June 30, 2021.
For instance, if an individual buys a house from a builder for Rs 50 lakh. However, the value of the house as per circle rate is Rs 60 lakh. As per the income tax laws, if the difference between the actual sale amount and the circle rate value exceeds 10 per cent, then the seller of the house i.e. the developer will be required to consider the sale at Rs 60 lakh to calculate the profit as per the income tax law.
In the above example, the difference between actual sale consideration and circle rate value is 20% (10 lakh divided by 50 lakh X 100). With the new announcement, the difference i.e. Rs 10 lakh will not be considered as income in the home buyer’s hand as the difference is up to 20% only.
The house buyer will be required to show the difference i.e. the gain of Rs 10 lakh as ‘Income from other sources and pay the tax accordingly.
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