No Adjustment if Circle Rate Value varies within 5% of Consideration: Incentive for Real Estate Sector (Budget 2018)

Incentive For Real Estate Sector (Budget 2018): No Adjustment to be made if Circle Rate Value does not Exceed 5% of the Consideration (i.e. variance limit set at 5%)

While presenting Budget 2018-19, the Finance Minister Mr Arun Jaitley has proposed Incentive For Real Estate Sector by way of No Adjustment to be made if Circle Rate Value does not Exceed 5% of the Consideration (i.e. variance limit set at 5%), i.e.  No adjustment shall be made in a case where the circle rate value does not exceed 5% of the consideration.

Currently, while taxing income from capital gains, business profits and other sources in respect of transactions in immovable property, the consideration or circle rate value, whichever is higher, is adopted and the difference is counted as income both in the hands of the purchaser and seller. Sometimes, this variation can occur in respect of different properties in the same area because of a variety of factors including shape of the plot and location.”

Thus in order to minimise hardship in real estate transaction, the Finance Minister proposed to provide that no adjustment shall be made in a case where the circle rate value does not exceed 5% of the consideration.

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