• Builder now says agreement value is less than market value

Hi, we are in the middle of buying a 2bhk flat+parking from a reputed builder in Thane. Booking was done end March token money realised was 10th April. After paying token+self fund+registration Stam duty+service tax we signed the agreement last week. on 19 April. We were waiting for the registration date. On following up this week, they say that the agreement value of 74lacs is less than the market value of 76lacs. This information was not realised for the whole month. To cover their mistake they are giving 2 options 
1. take 2 lacs cash from us(builder) and give us (builder) the chq for the same. but pay the balance stamp duty and taxes. Taking any cash will create troubles for us. 
2. remove the car parking from agreement. we will give you an allotment letter for the same. This letter will not have any legal value. 

please advice what should we do.
Asked 7 years ago in Property Law
Religion: Hindu

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6 Answers

if agreement value is less than market value you have to pay stamp duty as per ready reckoner rates

2) if a buyer purchases a property for a price below the applicable stamp duty value and the difference between the price of the property that has been paid and the stamp duty value is more than Rs 50,000, then such a difference is assumed to be the income of the buyer.

It is taxable in the hands of the buyer, as 'Income from other sources'

3) section 56(2)(vii)(b)(ii) works on the assumption that the buyer of the property would have paid consideration more than the stated consideration.

3)builder cannot sell car parking slots as it forms part of the common areas of the society . builder can allot car parking slots

4) dont give any cash to builder

Ajay Sethi
Advocate, Mumbai
95168 Answers
7604 Consultations

5.0 on 5.0

Car parking space cannot be sold by the builder

Taking 2 lakhs cash and giving it back to builder will cause you taxation problems

You cannot be subjected to the builder side mistake hence it is not necessary that you should be bound by his instructions.

Since you are in the midway, you may decide to go ahead after adjusting with the builder in a compromised way or to cancel the booking since the builder is not cooperating properly.

T Kalaiselvan
Advocate, Vellore
85369 Answers
2231 Consultations

5.0 on 5.0

1. This is not a serious problem at all.

2. In Kolkata in most of the cases, the consideration paid for buying a property is less than its market value fixed by the Government to get higher amount of stamp duty and registration fee.

3. You shall have to pay just the stamp duty as per the market rate though you have paid les amount for buying the said flat and this is what we do in Kolkata in such cases.

Krishna Kishore Ganguly
Advocate, Kolkata
27245 Answers
726 Consultations

5.0 on 5.0

1) you can take allotment letter from builder for car parking slot

2)you have to pay increased stamp duty and other charges amounting to Rs 28000

3) first option is better

Ajay Sethi
Advocate, Mumbai
95168 Answers
7604 Consultations

5.0 on 5.0

1. This is not the procedure that is followed while registering the sale deed.he is required to mention Rs.74 laks as the consideration in the sale deed but shall have to pay the stamp duty on Rs.76.44 lakhs being the running rate as recorded by the said Registry office.You can register at a price less than the running rate but shall have to pay the stamp duty as per the running rate. There is no need for removing the parking area or do the other exercise as prescribed by the builder as mentioned by you in your query.

2. You shall have to pay all expenses in connection with registration of your flat treating price of the flat as Rs.76.44 lakhs. there will be no necessity for paying extra Rs.2.44 lakhs through check and take back Rs.2.44 lakhs cash from him and such proposal given to you by the builder looks very strange to me. Be alert since you will be able to do anything to him if he refuses to pay you the said money.

Krishna Kishore Ganguly
Advocate, Kolkata
27245 Answers
726 Consultations

5.0 on 5.0

1. Common areas in an apartment are mentioned in the Declaration. The Apartment Ownership Act includes basements, gardens, cellars, parking areas, main walls, terraces, halls, stairways, corridors, entrances, exits and lobbies, and the entire space of land used during construction under the definition of common areas in an apartment complex.

Thus even if you buy this car parking space, later on formation of association, the car parking will be under the control of the association/society, therefore it would be better to accept the builder's suggestion now to forego the parking space in the agreement for the present.

2. The stamp duty for guideline value of the property has to be paid accordingly.

Since the amendment introduced by the Finance Act of 2010, the government charges service tax on buyers of apartments in under construction projects. Service tax is levied only on 25% of the total value of the apartment due to a 75% abatement that is allowed. So at 15% service tax applicable from June 1 this year, the buyer pays service tax of 3.75% on the total value of the apartment.

The Delhi High Court has said that home buyers cannot be charged service tax on payments made towards purchase of under construction apartments from builders if the total value of the apartment includes the land value.

However, service tax can still be levied on preferential location charges (PLC) that builders charge from buyers.

T Kalaiselvan
Advocate, Vellore
85369 Answers
2231 Consultations

5.0 on 5.0

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