People trying to pay less capital-gains tax can no longer undervalue their real-estate deals. A new provision in the Income-Tax Act, announced in the Budget, says capital-gains tax will be imposed on the basis of the value of property reflected in the stamp duty. And state governments decide the stamp duty.
Based on the stamp duty, the income-tax authorities will decide what the capital gains have been. At the moment, the capital-gains tax is based on the value buyers and sellers declare in property deeds.
Section 50 of the Income-Tax Act, which comes into effect on April 1, 2003, and accordingly applies to transactions from the assessment year 2003-2004, is expected to bring in sweeping changes for the real-estate market.
According to experts, capital gains on property are understated in the range of 30-60 per cent. But from April 1, tax authorities will decide on the capital-gains tax based on the state governments