The crunch in the real estate sector has intensified, as the Income Tax Department is all set to an excise tax on unsold apartments, which have been vacant for more than 1 year.

Developers may have to pay a tax equivalent to 30% of the rental value, assuming that the apartment or apartments in question can be rented out. Effectively it might translate to 10% of the property value over a period of time.

An indication of the introduction of this tax was made in the union budget earlier this year, when it was proposed that if any house is held as stock-in-trade and such property is not let out during the whole or part of the year, the deemed annual value would be nil for the period up to 1 year from the end of the financial year in which certificate of completion of construction of property was obtained from the competent authority. The implication was clear that after 1 year period, the property would be taxed.

Source: Financial Express