1. You won't find any problem during registration. The stamp duty will required to be paid on the higher of market value or agreement value.
2. But there will be problem from income tax department
3. Under section 50c of income tax act, if agreement value is less than market value, then it is deemed that the property is undervalued to save capital gains tax and thus the difference is transacted in cash.
4. So this will pose a problem for seller and buyer. Seller is deemed to have received the difference in cash and buyer is deemed to have paid difference in cash and so both parties are made liable for concealment of income.
5. It is advisable to submit the sale document for adjudication to the collector of stamps for determining the fair market value of property on which stamp duty is payable. If you think that the value assessed by collector is not proper, you can appeal to the district valuation officer. Sometimes due to surrounding circumstances and the nature of the property, the value which the property fetches is less than the circle rate. So not all transactions which are below the circle rate can be tainted as being one to avoid tax by undervaluing.
6. It is advisable to keep the consideration either equal to or a little greater than the circle rate to avoid any taxation issues for both parties in future.
7. The difference in consideration ie difference between agreement value and circle rate will be added to the incomes of both the parties.