Ahmedabad: Gujarat Chief Minister Narendra Modi in a letter to Prime Minister Manmohan Singh on Thursday demanded rollback of proposed tax deduction at source (TDS) on transfer of immovable property, saying it is against the federal polity.
The Union Budget 2012-13 has proposed TDS of 1 per cent of sale value of immovable properties except agriculture land. It will take effect from October 1, 2012.
Modi's letter said it appeared that the Centre intended to collect tax at the earliest point of time and put in place a mechanism for reporting of transactions in the real estate sector.
But the Centre had only considered the aspect of tax revenue and not adverse implications for other stakeholders, he said.
"This will lead to unnecessary harassment of people. It would result in enormous delay in getting the documents registered. Since the proposed procedure involves proof of deduction and payment of TDS, it would complicate the entire procedure and result in delayed processing for registration," the letter said.
Having to deal with two authorities for registration would add to people's woes and affect the realisation of the stamp duty, an important revenue source for states, it added.
The Centre had not bothered to consult the states on such a vital issue which affects the common man and the state's finances in a big way, Modi said, adding, "It is very clear that to ensure its own income, the Government of India has, once again, overlooked the nation's federal arrangements."
The letter also mentioned that in the past Modi had drawn the Prime Minister's attention to several decisions which adversely affected the federal structure and autonomy of the states.
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