The Central Board of Direct Taxes (CBDT) has clarified that in the event an immovable property to be declared under the Income Declaration Scheme 2016 where the cost of the property is only partly evidenced by a registered deed and partly otherwise, the option of calculating the fair market value of the property based on applying the cost inflation index to stamp duty value shall be available only in respect of that part of the property the cost of which is evidenced by a registered deed.
In a fifth set of FAQs released on Thursday on IDS 2016, the CBDT has clarified that the remaining part the fair market value of the property shall be determined based on the provisions of rule 3(1)(d) of the Rules without taking into effect the proviso to the said rule.
The CBDT has used an illustration to point out the manner of treatment of determining fair market value in such cases.
Thus, if Mr X purchased a piece of land in year 2004-05 for Rs 10 lakh, however the stamp duty value was Rs 15 lakh. Thereafter, in the period 2005-06 to 2007-08, Mr X constructed a two storeyed house on the said land. The amount to be declared in respect of the said property shall be (A + B) where
A= Value of land (if the assessee opts for valuation on the basis of indexation) shall be Rs 15 lakh x cost inflation index of 2016-17 cost inflation index of 2004-05
B = Fair market value of the house (excluding value of the land) as on June 1, 2016 as determined by the registered valuer or the cost of construction whichever is higher.
The CBDT has also said that a declarant can revise the fair market value of immovable property already filed on account of the amended provisions of the Income Declaration Scheme Rules, 2016 even in a case where such revision may result in downward revision of the declared amount in respect of the immovable property.
