NAGPUR: The income tax department is set to impose significant penalties on property sub-registrar offices (SRO) for failing to accurately report real estate transactions in their financial statements. Investigations at various SROs revealed that transactions totaling approximately Rs13,000 crore were not disclosed in the required format. Registrations of properties valued at Rs30 lakh and above must be reported to the income tax department under the Statement of Financial Transactions (SFT).
This marks a rare occasion where a government department penalizes another. Last year, SROs received a penalty notice, but it was for a relatively minor sum. This time, penalties could reach several lakhs for each office. SROs are responsible for collecting stamp duty and fall under the state’s revenue ministry, while income tax is managed by the central government.
There are various entities required to submit SFT information to the income tax department. Delays in submission can result in penalties under Sections 27F and FF of income tax regulations, potentially amounting to Rs500 per day of delay. The department has identified discrepancies in transactions registered over the past five years; the older the transaction, the higher the penalty, sources noted.
The department is finalizing procedures before issuing penalty notices. Subsequently, it will be up to the state’s revenue department to determine accountability and arrange for payment, according to sources.
Tax officials have conducted a series of searches across SRO offices within the region. Each office inspected has shown signs of under-reporting transactions. Inspections have also been carried out in Akola, Yavatmal, Amravati, Buldhana, and other areas with findings indicating transactions worth Rs3,000 crore were left unreported under the SFT, bringing the total to Rs13,000 crore.
Failure to report these transactions allows individuals to evade taxes. The SFT serves as a mechanism for cross-verifying whether reported transactions appear in an individual’s income tax returns. The registrar’s office employs a system to flag transactions exceeding Rs30 lakh. The responsibility for filing SFT details has been assigned to chartered accounting firms in each district.
