New I-T rules may send houses beyond middle class means

Re-development of old tenanted properties that provided a bulk of the building stock in the city is set to cease following an amendment in the Income Tax Act that has made such transactions prohibitively expensive. Developers fear the already limited housing stock supply in Kolkata will dry up, leading to price escalation and sending houses beyond the reach of middle income families.

The new rules also discourage the development of low and middle-income properties in localities where a high-income project has been developed. With the valuation authority equating both projects with the same yardstick, not only does the buyer have to pay stamp duty on the value decided by the registering authority rather than the purchase price, he has to now pay income tax for the differential amount (difference between actual transaction value and valuation done by registration authorities). The developer, too, has to pay I-T on the differential amount.

Source: The Times Of India