At present, a home that is unoccupied after being accorded a completion certificate is subject to tax on its notional rental income. Since for a property developer a constructed building is stock-intrade, the Budget has proposed to apply this rule only after one year from the end of the year in which the completion certificate is received. This gives a developer some breathing time to liquidate inventories.
Section 23 of the Income Tax Act specifies how the annual value of a house is to be determined. Considering specific business issues in case of a real estate developer, the Budget proposes to amend this Section. It is proposed that if a house consisting of a building and land is held as stock-in-trade, and the property or any part of it is not let out during the entire or any part of the previous year, its annual value or a part of its annual value, for a period up to one year from the end of the financial year in which the certificate of completion of its construction was obtained from the competent authority, will be considered nil.
This proposal is State-specific, but can be used as a precedent in future. The new capital city of Andhra Pradesh is being constructed through an innovative land pooling mechanism without the use of the Land Acquisition Act.
In a land pooling scheme, compensation in the form of a reconstituted plot or land is provided to the land-owners.However, the existing provisions of the Act do not provide for an exemption from tax on transfer of land under the land pooling scheme as well as on transfer of land pooling ownership certificates (LPOCs), or on the reconstituted plot or land. The Budget has proposed to exempt those holding land as on June 2, 2014, the date on which Andhra Pradesh was reorganised, and whose land is being pooled to create the capital city under the government’s scheme.
As of now, this is a State-specific relief. But one can look forward to similar relief in other cases if the circumstances are similar.
Courtesy By : Times Of India