Real estate companies across the country are awaiting the decision of an important case between Unsecured Housing and Construction and Income Tax Department attached to the unseen inventory and tax related tax. In the budget of 2017-18, the government introduced a provision of tax on the estimated income on the ready-to-move inventory. The case between Ansal and Income Tax department is already going on in the court.
Realty companies fear that tax can be a big burden on them and they can get notice for the inventory, which is due to recession since 2012-13. Proposal was given in the budget that if a residential apartment is kept as a stock-in-trade and is not leased for a full year or there is not rent given on its one part, then the construction certificate of the construction year has been received in the financial year, The estimated annual value will be zero for a period of one year from its end.Sr.
Sr. Chartered Accountant Dilip Lakhani said, “The tax on the income from the Income From House property on the estimated income of real estate developer without any inventory, which is stock-in-trade, would be wrong. At the end of the year, the realty company may have a desire to reduce inventory of the market or not to reduce the company’s price.
Lakhani said that the motive is not to hire inventory and it can be sold in the next financial year. The amendment has also been given relief for one year, which is not sufficient in current market conditions. Under section 22 of the Income Tax Act, 1961, if a person holding a house property does not use it for his or her living, then an estimated value of it is levied. Residential Properties and Assessee , used for self-occupation, are exempt from the property used for their business or profession.
Venkata Rao, founder of Integrate Business Advisory, affiliated to the Corporate Tax Compliance, said, “If the decision to impose a tax on the estimated rental value of the ready inventory before the amendment comes, then it will be a major loss to many Realty Developers because the recession since 2012-13 Due to this, there is a lot of inventory available to the developers. ‘
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