Income Tax Department Drive for Capital Gains Tax Evasion in Joint Development Agreements, ETCFO
NEW DELHI: The income tax department is set to launch a drive to nudge people who entered into joint development agreements, but didn’t pay capital gains, to deposit the requisite tax. In Kolkata and Bengaluru alone, there are 25,000 to 30,000 such entities have been identified, said sources.
Joint development agreements — a deal between real estate developers and landowners — are used across the country with Delhi and other cities also on the radar. The transfer under the agreements, which could cover a small piece of land where three or four floors are built or a larger tract with multiple houses or plots, require landowners to pay capital gains tax.
The campaign is expected to be launched over the next few days with emails and correspondence addressed to identified taxpayers, asking them to come clean on their own. Govt sources said that the tax department believes that majority of individuals may have missed paying taxes and are likely to come forward and clear dues. Only in cases where landowners do not come forward will tax authorities contemplate the next set of measures.
Taxpayers, whose transactions pertain to the last financial year, can update their latest income tax return and pay the requisite tax. For cases related to previous years, an additional 25% may be required to be paid but compliance will ensure there is no penalty.
In recent years, the tax department has adopted ‘Nudge’, or Non-Intrusive Usage of Data to Guide and Enable Taxpayers, to push taxpayers to pay their dues without penalty and the response has been quite encouraging. For instance, a campaign on foreign assets and income for FY 2023-24 which nudged 19,500 individuals saw 12,700 revised returns, with close to 900 changing their residency from residents to non-residents. More than 30,000 reported overseas assets and income during the period with disclosures of Rs 29,000 crore assets and over Rs 1,000 crore additional taxes. Similar focused campaigns have been run for virtual digital assets and HRA exemptions, getting people to comply without taking punitive action.
