The transfer of development rights (TDRs) may have not met with the anticipated success in the city, but there seems to be a section that has been reaping benefits — albeit discreetly.

Premium earned on the sale of these TDRs and subsequent evasion of income tax has now come under the scanner of Income Tax Department officials, who with the help of Department of Stamps and Registration and Bruhat Bangalore Mahanagara Palike (BBMP) have caught the violators, forcing them to cough up the tax on the premium earned.

Under TDR, Development Rights Certificate is given to person by making available certain amount of additional built up area for having relinquished or surrendering land for public purposes. The person can either use extra built up area for himself or transfer it to another person in need of extra built up area for an agreed sum. It was introduced in the Karnataka Town and Country Planning Act of 1961 during 2005-2006.

“Certain assesses, who surrender lands in favour of BBMP in order to get floor area ratio (FAR)/ floor space index (FSI) in the form of TDR and subsequently sell the same for premium. The buyers of such TDRs sell the same at hefty premium in favour of other persons,” an Income Tax press release explained the violation.

In a number of cases, it said, assessees have not offered income or correct income for taxation. “When confronted with facts, some assessees have immediately come forward and paid due taxes,” it said.

As many as 16,000 persons have been served with notices asking them to explain banking transaction as well certain property transactions.

Meanwhile, a BBMP official told The Hindu that they receive on an average 10 files daily that pertain to TDR. “Most of these are from those areas where road widening or drain work has been taken up. Since BBMP cannot afford to pay compensation, TDRs are being given,” he explained.

The department is also looking at the evasion of tax by understating the value of consideration with respect to transfer of properties in the registered sale deed. The difference between the guidance value and the sale consideration cited in the sale deed should be offered for taxation as per section 50C of the Income Tax Act, 1961.

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