NEW DELHI: Tax authorities in Bengaluru have come across a new tool for evading taxes and stamp duty, a development that may have implications across states. Initial estimates suggest land deals of over Rs 300 crore have seen under-reporting.The income tax department’s directorate of intelligence and criminal investigation in the southern city has found several instances of incomplete disclosure of the entire sale consideration in the registered sale deeds.The remaining amount is paid by executing unregistered full and final settlement deeds with the payment routed through banking channels.There are several instances of the method being used by local builders to purchase land parcels and then develop them into residential units and plots.“Since the additional payment made is not part of the sale deed, the buyer pays no stamp duty and registration fee to the state govt, resulting in huge revenue loss,” said a person familiar with the probe.The tax authorities have alerted the registration department in Karnataka. Stamp duty evasion in the state can result in hefty penalties.Besides, the buyers did not deduct TDS despite purchasing ‘urban agricultural land’ as a result of which the additional amount paid through full and final settlement deed remained outside the radar of the tax department. Some of the sellers, who have claimed exemption from the sale of agricultural land have not filed their returns, as a result of which tax was not paid.“The department also identified a number of registered transactions involving exchange of property involving undervaluation of properties sold, on which there is short payment of stamp duty and registration fee and payment of additional consideration outside the book,” said a person in the know.
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The findings call for a revision in the guidance value of the land which is adjacent to urban areas and align the prices to market rates.“The circle rate is significantly lower than the market rate, which is resulting in these kind of transactions,” an official said.
