New Delhi: With several real estate companies still outside the tax net, there is no mechanism with the Income Tax (I-T) Department to ensure that all the registered companies have PAN and are filing their income tax returns regularly, the Comptroller and Auditor General (CAG) has found in its performance audit of the real estate sector.
The report said that the I-T Department was not effectively using other third party data or surveys to widen its tax base in the real estate sector.
The report on “Assessment of Assessees in Real Estate Sector”, tabled in the Parliament on Tuesday, added that transactions with undervalued sales consideration were generating black money in the process.
“Audit notices several companies outside the tax net. There is no mechanism with Income Tax Department to ensure that all the registered companies have PAN and are filing their income tax returns regularly,” the report said.
“Due importance was not accorded by the Income Tax Department to monitor non-PAN transactions despite these being under the highest risk category from the point of view of tax evasion in general and due to these being transactions of real estate sector in particular. There was a lack of mechanism in the Income Tax Department to ensure that persons involved in high value sales of immovable properties offered capital gains for tax,” it added.
The CAG also noted that the benefit of section 80-IB(10) of the Income Tax Act – which provides 100 per cent deduction of profit derived from construction of housing projects on certain conditions – was being enjoyed by non-eligible and unintended groups.
“There is multiplicity of criteria for classifying housing projects for economically weaker sections or low income groups by the government on the basis of size or affordability of the dwelling units.
“Enforcement of conditions for allowing deductions under Section 80-IB(10) was weak, leading to benefits being availed by non-eligible persons/unintended groups. Thus the targeted groups could not be benefited and the revenue foregone on this count year after year by the government may have benefited unintended persons,” it said.
[source_without_link]IANS[/source_without_link]