ICAI for repeal of I-T stamp duty provision

The Institute of Chartered Accountants of India (ICAI) has sought a repeal of the Section 50C of the Income Tax Act as it fixes the stamp duty at a higher level, ignoring the market rate of the transferred property.

The Section 50C was accommodated as a special provision in the I-T Act by the Finance Act, 2002, with effect from assessment year 2003-04 for determining the full value of consideration in cases of sale/ transfer of immovable property.

Accordingly, capital gains tax is levied on the market value adopted by or assessed by any authority of a state government for the purpose of payment of stamp duty in respect of such transfers even though the actual transaction cost at market value is lower than the notional value determined.

The section also provides that where the assessee claims that the value assessed for stamp duty purposes exceeds the fair market value of the property as on the date of transfer, and he has not disputed the value so assessed in any appeal or revision or reference before any authority or court, the assessing officer may refer the valuation of the relevant asset to a valuation officer in accordance with Sec 55A of the I-T Act.

If the fair market value determined by the valuation officer is less than the value adopted for stamp duty purposes, the assessing officer may take such fair market value to be the full value of consideration.

However, if the fair market value determined by the valuation officer is more than the value adopted or assessed for stamp duty purposes, the assessing officer shall not adopt such fair market value and will take the full value of consideration to be the value assessed for stamp duty purposes.

ICAI, in its pre-budget memorandum said that income-tax assessee's in Delhi and Kerala did not face much difficulty as these states have standard guidelines for stamp duty computation.