Tax incentive for the development of capital of Andhra Pradesh ..!
As per section 96 of the Right to Fair
Compensation and Transparency in Land Acquisition, Rehabilitation and
Resettlement Act, 2014, the specified compensation received by the landowner in
lieu of acquisition of land is exempt from income tax.
The Land Pooling Scheme is an alternative form of
arrangement made by the Government of Andhra Pradesh for formation of new
capital city of Amaravati to avoid land-acquisition disputes and lessen the financial
burden associated with payment of compensation under that Act.
In Land pooling
scheme, the compensation in the form of reconstituted plot or land is provided
to landowners. However, the existing provisions of the Act do not provide for
exemption from tax on transfer of land under the land pooling scheme as well as
on transfer of Land Pooling Ownership Certificates (LPOCs) or reconstituted
plot or land.
With a view to provide relief to an individual or
Hindu undivided family who was the owner of such land as on 2nd June, 2014, and
has transferred such land under the land pooling scheme notified under the
provisions of Andhra Pradesh Capital Region Development Authority Act, 2014, it
is proposed to insert a new clause (37A) in section 10 to provide that in
respect of said persons, capital gains arising from following transfer shall
not be chargeable to tax under the Act: (i) Transfer of capital asset being
land or building or both, under land pooling scheme.
(ii) Sale of LPOCs by the said persons received
in lieu of land transferred under the scheme.
(iii) Sale of reconstituted plot or land by said
persons within two years from the end of the financial year in which the
possession of such plot or land was handed over to the said persons. This
amendment will take effect retrospectively , from 1st April, 2015 and will,
accordingly , apply in relation to the assessment year 2015-16 and subsequent
years.
It is also proposed to make amendment in section
49 so as to provide that where reconstituted plot or land, received under land
pooling scheme is transferred after the expiry of two years from the end of the
financial year in which the possession of such plot or land was handed over to
the said assessee, the cost of acquisition of such plot or land shall be deemed
to be its stamp duty value on the last day of the second financial year after
the end of financial year in which the possession of such asset was handed over
to the assessee. This amendment will take effect from 1st April, 2018 and will,
accordingly , apply in relation to the assessment year 2018-19 and subsequent
years. [Clauses 6 & 25]
Special provisions for computation of capital
gains in case of joint development agreement
Under the existing provisions of section 45,
capital gain is chargeable to tax in the year in which transfer takes place
except in certain cases. The definition of `transfer', inter alia, includes any
arrangement or transaction where any rights are handed over in execution of
part performance of contract, even though the legal title has not been
transferred. In such a scenario, execution of Joint Development Agreement
between the owner of immovable property and the developer triggers the capital
gains tax liability in the hands of the owner in the year in which the
possession of immovable property is handed over to the developer for development
of a project.
W ith a view to minimise the genuine hardship
which the owner of land may face in paying capital gains tax in the year of
transfer, it is proposed to insert a new sub-section (5A) in section 45 so as
to provide that in case of an assessee being individual or Hindu undivided
family , who enters into a specified agreement for development of a project,
the capital gains shall be chargeable to income-tax as income of the previous
year in which the certificate of completion for the whole or part of the
project is issued by the competent authority .
It is further proposed to provide that the stamp
duty value of his share, being land or building or both, in the project on the
date of issuing of said certificate of completion as increased by any monetary
consideration received, if any , shall be deemed to be the full value of the
consideration received or accruing as a result of the transfer of the capital
asset.
It is also proposed to provide that benefit of
this proposed regime shall not apply to an assessee who transfers his share in
the project to any other person on or before the date of issue of said
certificate of completion. It is also proposed to provide that in such a
situation, the capital gains as determined under general provisions of the Act
shall be deemed to be the income of the previous year in which such transfer
took place and shall be computed as per provisions of the Act without taking
into account this proposed provisions.
It is also proposed to define the following
expressions “competent authority“, “specified agrement“ and “stamp duty value“
for this purpose.It is also proposed to make consequential amendment in section
49 so as to provide that the cost of acquisition of the share in the project
being land or building or both, in the hands of the land owner shall be the
amount which is deemed as full value of consideration under the said proposed
provision.
These amendments will take effect from 1st April, 2018 and will,
accordingly , apply in relation to the assessment year 2018-19 and subsequent
years. It is also proposed to insert a new section 194-IC in the Act so as to
provide that in case any monetary consideration is payable under the specified
agreement, tax at the rate of ten per cent shall be deductible from such payment.
This amendment will take effect from 1st
April,2017. [Clauses 22, 25 & 64]
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