IT Department Plans to Launch Nudge Campaign on Joint Development Agreements
The Income Tax Department is planning to initiate a drive to urge landowners who came into joint development agreements (JDAs) but did not pay capital tax gains to settle their dues voluntarily. According to the Sources, only in Kolkata and Bengaluru, there are around 25,000-30,000 such entities that have been identified, with some other major cities (including Delhi) under inspection.
Joint Development Agreements are arrangements between Real Estate developers and landowners that outline the construction of multiple floors/houses on a piece of land. Under the Income Tax Act, landowners are required to pay capital gains tax on transfers made under such agreements.
The campaign is expected to kick off in the coming days, primarily involving the sending of emails and contacting identified taxpayers to encourage them to voluntarily disclose and pay the applicable tax.
According to the government sources, “the majority of the landowners may have missed paying taxes and are likely to comply if notified.” For cases from previous financial years, an additional 25% may be applicable; however, voluntary compliance will ensure that no penalty is levied.
The initiative follows the department’s increasingly successful “Nudge” strategy (Non-Intrusive Usage of Data to Guide and Enable Taxpayers). In recent campaigns, including one targeting foreign assets and income for FY 2023-24, 12,700 of 19,500 identified individuals revised their returns, reporting additional taxes exceeding Rs 1,000 crore. Many similar drives have been implemented for virtual digital assets and HRA exemptions, encouraging compliance without imposing any penalty or punitive action.
This campaign is part of the government’s ongoing efforts towards enhancing tax compliance in the real estate sector, without resorting to punitive measures to clear outstanding dues.
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