The new IT rules amendment exempts immovable property grants given to residents of unauthorized colonies in NCT Delhi from income tax

The Central Board of Direct Taxes has issued the Income tax (Thirteenth Amendment), Rules, 2019 on 11 March 2019. The amendment has exempted residents of unauthorized colonies in National Capital Territory of Delhi to the income tax payable for receiving immovable property without consideration.

The amendment has added Rule 11UAC which lays down the class of persons exempt under clause XI of the proviso to clause (x) of sub-section (2) section 56 of Income Tax Act, 1961.

The Section 56(1) of IT Act 1961 lays down that any income not exempted from the total income under the Act shall be charged income-tax under the head “Income from other sources”, if it is not charged income-tax under any of the other heads.

The Section 56(2) lays down a list of incomes covered under the head “Income from other sources”.

The clause x of the 56(2) includes immovable property or money with value Rs. Fifty Thousand or above received without consideration under the head ‘Income from other sources.’

The proviso provides exceptions to this, and the new amendment, through Rule 11UAC, explains the class of persons exempted under proviso clause XI. Any immovable property, being land or building or both, received by a resident of an unauthorized colony in the National Capital Territory of Delhi, where the Central Government has regularized the transactions, is exempted from income tax under the head ‘income from other sources.’

The exception shall come to force from April 1 2020.