Income tax deadlines for Vivad Se Vishwas scheme, first time home buyers tax relief extended

The government has announced some income tax related reliefs due to the continuing novel coronavirus pandemic. These are:

• Extension of deadline under Vivad se Vishwas scheme for payment without interest by 2 months from 30th June to 31st August, 2021.
• First time home buyers could avail special tax relief on investment in residential house as per specified conditions. The deadline for making this investment in residential house for tax deduction has been extended by more than 3 months from earlier deadline of June 30, 2021.
• Amount paid for medical treatment to an employee by an employer or to a person by any person on account of COVID for FY 2019-20 & subsequent year won’t be taxed
• Ex-gratia from any other person to be restricted to Rs 10 Lakh
• Extension of 3 months granted for PAN-Aadhaar linking – from 30th June to 30th Sept, 2021.

The initial announcement of tax-sop on buying a residential property for the first time buyer was announced last year. As per the announcement,, an income tax relief was given for buyers of new homes or residential real estate (primary purchase) of value up to Rs 2 crore. As per the announcement, the acceptable differential between the circle rate and agreement value in real estate sale/purchase for the purpose of income tax is being hiked from 10 per cent to 20 per cent.

To know how home buyers would benefit from this can be explained as follows: Suppose an individual buys a house from a builder for Rs 50 lakh. However, the value of the house as per circle rate is Rs 60 lakh. As per the income tax laws, if the difference between the actual sale amount and the circle rate value exceeds 10 per cent, then the seller of the house i.e. the developer will be required to consider the sale at Rs 60 lakh to calculate the profit as per the income tax law.

Further, the house buyer will be required to show the difference i.e. the gain of Rs 10 lakh as ‘Income from other sources’ and pay the tax accordingly. In the above example, the difference between actual sale consideration and circle rate value is 20 per cent (10 lakh divided by 50 lakh X 100). With the new announcement, the difference i.e. Rs 10 lakh will not be considered as income in the home buyer’s hand as the difference is up to 20% only.

Another extension is related to the Vivad se Vishwas Scheme. As per the announcement made taxpayers have now time till August 31, 2021 to make payment under the scheme without any interest liability. If the payment is made after the expiry of this new deadline, then the taxpayer would be required to pay an additional 10% amount of the disputed tax. As per the press release issued by the Finance Ministry on June 25, 2021, last date of making payment with additional amount has been notifed as October 31, 2021. It is a direct tax dispute resolution scheme announced in Budget 2020.

As per a report by ANI, the government has also announced that amount paid for medical treatment to an employee by employer or to a person by any person on account of COVID for 2019-20 and subsequent year won’t be taxed in hands of employee or beneficiary. “Ex-gratia payment by an employer to an employee’s family or by any person to any other person’s family on the death of employee, any other person on account of COVID for FY 19-20 or subsequent year will be tax exempted. Ex-gratia from any other person to be restricted to Rs 10 lakh, as per the report.

The government has also extended the deadline of linking PAN with Aadhaar by three months to September 30, 2021 from June 30, 2021 i.e.by three months.