Income Tax Dept To Scan Realty Deals For Evasion

Enhanced Scrutiny in Real Estate Transactions

The income-tax department has intensified its focus on the real estate sector, particularly for transactions exceeding ₹30 lakh. This move aims to prevent tax evasion and ensure transparency in property dealings.

Triggers for Tax Scrutiny

  • Gross Income Mismatch: If the property's value surpasses eight times the buyer's gross income, it may invite scrutiny.

    • Gross income = Total income + Exempted income - Total tax paid
    • Example: With a gross income of ₹10 lakh per annum, purchasing a house worth more than ₹80 lakh could lead to scrutiny.

  • Large Cash Deposits: Cash deposits of ₹10 lakh or more in savings accounts will also raise scrutiny flags.

Automated Scrutiny Process

  • Computer Assisted Scrutiny System (CASS): Scrutiny cases will be generated through CASS, minimizing manual intervention.
  • Annual Information Return (AIR): Registrars report transactions, including house sales/purchases over ₹30 lakh, to the tax department.

Additional Scrutiny Criteria for FY

  • Capital Gains: Gains exceeding ₹25 lakh may attract scrutiny.
  • House Property Loss: Losses of more than ₹2.5 lakh will also invite scrutiny.

Broader Implications

  • Real Estate Agents and Builders: Turnovers exceeding ₹5 crore may face scrutiny.
  • Professionals with Significant Receipts: Doctors, architects, etc., with gross receipts over ₹40 lakh, and those reporting profits less than 30% of gross receipt, are also under the scanner.

This heightened vigilance underscores the tax department's commitment to combating black money in the real estate sector.