One percent sales tax applicable for non-agri land
The Kerala High Court on Monday held that when land is handed over to
the government, deduction of tax at 1 per cent from the sale amount
will be applicable if the property is not an agriculture land and the
amount comes to Rs 50 lakh or more.
Justice V Chidambaresh passed
the order while considering a petition filed by M C Thomas of
Kalamassery seeking a directive to the government to disburse the entire
sale consideration for the land taken for Kochi Metro Rail without
deducting any amount as tax.
The petitioner had agreed to transfer
his 3.98 cents in Aluva municipality for the Metro Rail Project. A
district-level purchase committee constituted for the purpose had
negotiated with the petitioner, in regard to the price of the property.
Later, the sale consideration was fixed at the rate of Rs 17 lakh.
The petitioner had handed over the consent letter and original documents, including title deeds.
“When
there is no compulsory acquisition of land, Section 194LA of Income Tax
Act is not applicable and they are not bound to deduct any amount as
Tax Deducted at Source (TDS),” the petitioner submitted.
The Court
pointed out that Section 194LA of the Act has been introduced, in
effect from June 1, in order to have a mechanism for reporting
transactions in the real estate sector and collect tax at the earliest
point of time.
It provides that from every transferee, at the time
of making a payment as sale consideration for transfer of immovable
property to a resident transferor, tax should be deducted.
This will be applicable only if the property is not agricultural land and the total sale consideration is `50 lakhs or more.
The petitioner’s land is situated within the Aluva Municipality.
“If
the land is situated within the limits of a municipality or a municipal
corporation, it is not treated as an agricultural land, irrespective of
the nature of the land,” the court held.
The Court also directed
the District Collector to disburse the sale consideration amount to the
petitioner, after deducting income tax at 1 per cent of the sum.
