and gains, transfers of property (as defined) without consideration/with inadequate consideration in case of individuals and Hindu Undivided Families (except transfers to relatives, on occasion of marriage, inheritance, etc) were recently made taxable. Following the abolition of gift tax, the government’s move of taxing unreported income and gains in the hands of individuals/HUFs has stirred a controversy.
TDS on transfer of property by an Indian resident
A majority of the purchasers/sellers of immovable properties were not quoting their Permanent Account Number (PAN) in the documents, even though statutorily required to do so. In order to have a reporting mechanism for transactions in real estate, the law was amended by including such transactions under the ‘withholding tax’ net. The transferees are now required to deduct tax at the rate of 1% on payments for transfer of immovable property (other than agricultural land).
Bounty for senior citizens
Tax reforms for senior citizens, such as lowering the qualifying age from 65 to 60, exempting them from payment of advance tax where they earn passive income and increasing the limit on tax benefits, have provided some relief.
Introduction of regimes, implementation & abolition
Fringe Benefit Tax was introduced by the Finance Act, 2005, to ease the tax burden on employees by shifting the same on to the employer. However, it was abolished through Finance Act, 2009.
The Direct Taxes Code proposed extensive changes to the overall tax system in India. It aimed at rationalising the tax regime and having a more modern and stable tax structure, which also involved reducing taxes. The draft has undergone some changes, and there is still ambiguity around whether it will bring about the desired change.
The writer is executive director, Tax & Regulatory Services, EY. Chaitali Bhatawdekar, senior tax professional, EY, contributed to the article. Views expressed are personal