Government of India
Department of Revenue
Ministry of Finance
Central Board of Direct Taxes
New Delhi, 13thNovember, 2020
PRESS RELEASE
Income Tax relief for Real-estate Developers and Home Buyers
As part of the AatmaNirbhar Bharat Package 3.0 as announced by Hon’ble Finance
Minister on 12th November, 2020, certain income tax relief measures were brought in for
real–estatedevelopersandhomebuyers.
Up to 2018, section 43CA of the Income-tax Act, 1961 (‘the Act’) provided for
deeming of the stamp duty value (circle rate) as sale consideration for transfer of real–estate
inventory in the case the circle rate exceeded the declared consideration. Consequentially,
stamp duty value was deemed as purchase consideration in case of buyer under section
56(2)(x) of the Act.
In order to provide relief to real estate developers and buyers, the Finance Act,
2018, provided a safe harbour of 5%. Accordingly, these deeming provisions triggered only
where the difference between the sale/purchase consideration and the circle rate was more
than 5%. In order to provide further relief in this matter, Finance Act, 2020 increased this
safe harbour from 5% to 10%. Therefore, currently, the circle rate is deemed to be the
sale/purchase consideration for real estate developers and buyers only where the variation
between the agreement value and the circle rate is more than 10%.
In order to boost demand in the real–estate sector and to enable the real–estate
developers to liquidate their unsold inventory at a rate substantially lower than the circle rate
and giving benefit to the home buyers, it has been decided to further increase the safe
harbour from 10% to 20% under section 43CA of the Act for the period from 12th
November, 2020 to 30th June, 2021 in respect of only primary sale of residential units of
value up to Rs. 2 crore. Consequential relief by increasing the safe harbour from 10% to
20% shall also be allowed to buyers of these residential units under section 56(2)(x) of the
Act for the said period. Therefore, for these transactions, circle rate shall be deemed as
sale/purchase consideration only if the variation between the agreement value and the
circle rate is more than 20%.
Legislative amendments in this regard shall be proposed in duecourse.
(Surabhi Ahluwalia)
Commissioner of Income Tax
(Media & Technical Policy)
Official Spokesperson, CBDT