Hi I am selling an Independent house property at Hyderabad Nacharam area, purchased 12 years back, at cost of 36Lakhs agreement of sale value. the person is going through bank loan. the Govt market value evaluation of the property is coming around 16.5 Lakhs. so though I will be receiving 36Lakhs in my account, actual saledeed is happening of 16.5 (Govt Guidance value). My questions are 1- if I am declaring the 36 lakhs as income from sell of my house, will I be questioned by the tax department, why did I register lesser value? what are the implications to it, and is the buyer or seller are accountable for this violation? 2- I hear there is no need of capital gain till 30 lakhs, is it correct? 3- when I had purchased this property in 2007, I too had agreement of sale value 23 lakhs and actual sale deed was done of Govt guidance value of 7.5 lakhs. I had paid the 23lakhs to the then owner through bank homeloan and cheque payment. so when I calculate capital gain, can my base value be 23lakhs or 7.5 lakhs?
First answer received in 30 minutes.
Lawyers are available now to answer your questions.
1) if actual amount received by you is Rs 36 lakhs in your bank account then you should not show Rs 16 lakhs as sale consideration
2) if u sell at 36 lakhs the difference between circle rate and transaction amount of Rs 16 lakhs will be deemed to be the capital gain and tax will be charged accordingly.
3) your base value would be amount paid by you to seller ie Rs 23 lakhs
dear sir, kindly answer these follow up questions 1) if actual amount received by you is Rs 36 lakhs in your bank account then you should not show Rs 16 lakhs as sale consideration Question: I will show 36 as sale consideration, but I will be producing the SaleDeed copy as proof which is of 16 lakhs, because the buyer is registering at 16 lakhs, so will be I be questioned on that , that why did I allowed registration at Govt value or is it acceptable by income tax, that you can give a bank statement and declaration of receving 36lakh as sale value, but show sale deed proof of 16 lakhs? will I be in any such legal issue for this registration? 2) if u sell at 36 lakhs the difference between circle rate and transaction amount of Rs 16 lakhs will be deemed to be the capital gain and tax will be charged accordingly. I was informed that the diffrence amount can become the Income from other sources, because its not reflected in sale deed , and my tax slab rule will be applied, than the 20% tax on the tax gain 3) your base value would be amount paid by you to seller ie Rs 23 lakhs Question: what papers can I produce, i have the sale deed of 7lakhs, The Agreement of sale value of 23 lakhs and the bank loan papers, is that enough so show 23 lakhs as my expenditure for purchasing the house to take it as base value? Question 4: I heard capitax gain can be saved by purchasing another immovable property, is it applicable if the seller already has 2 houses in her name, excluding the house that is being sold? Question 5- is it necessary to file the ITR for this capital in the same fiscal year, or within 2 yrs is fine, will it cause notice form incometax?
since the market value is lesser than the agreement value and the market value is going to be mentioned in sale deed but full consideration of 36 lacs is going to be received by you in cheque, then its advisable that you show the excess money against sale of some furniture or something
section 50C of IT Act considers the case when the market value is higher than agreement value and parties mention the lower agreement value and not market value, in which case the market value is deemed to be taken as full value of consideration. This is from the seller's angle
from the buyer's angle there is s.56 (x)(b) (B) which considers a case where the market value is higher than agreement value and the difference is added to the buyer's income and taken as 'income from other souces'
in this case both buyer and seller do not fall in above sections as the agreement value is higher than market value
however do consult a qualified CA for more clarity
for registration of sale deed sub registrar office considers circle rate . you have stated that circle rate is Rs 16 lakhs and you are showing sale consideration as Rs 16.50 lakhs . you should not have problems in registration of sale deed
2) you should show actual sale consideration paid by you in sale deed which is of rs 36 lakhs
3) you can show bank loan papers to show that Rs 23 lakhs was expenditure incurred by you for purchasing the property
4) he cant claim benefit u/s 54. Capital gains will be chargeable to tax.as he already has 2 houses
5) as far as your tax liability is concerned consult a local CA
Sir appreciate a lot for the clarity. But the problem is the buyer is not ready to put the Consideration value which is 30 lakhs on the saledeed, as he is afraid by putting 30 lakhs he has to pay stamp duty of 30 lakhs. but you are saying we can put consideration value in saledeed i.e. 30 lakhs, but registar office will charge stampduty on circle value only which is 16lakhs. is that correct? lets assume that he did not put 30 lakhs on the sale deed, and only put 16.5 lalkhs, i.e. consideration value and circle value as same which is 16.5, then in that case, I the seller, can I still go ahead and declare 30lakhs as the money received from the sale of the house? what proof I have, because the sale deed is mentioning 16.5 only. will I not be in any legal trouble? if not legal trouble, will not the diffrence amount which is another 13.5 become income from other sources (tax i have to pay as per my tax slab which is 30%) or can It still be applicable under capital gain (tax i have to pay is 20%)?
1) stamp duty would be on Rs 30 lakhs declared by you in sale deed
2) to avoid legal complications advised to mention actual sale price as consideration in sale deed
30 you can offer to split stamp duty expenses with the purchaser
reply to follow ups
1. 16lacs u can show in sale deed. balance you can ask buyer to pay to your relative or ask the buyer to transfer the balance amount from any of his relative to your relative
2. if you sell at 16 lacs and show that in sale deed and balance you get in your account, then you need to show that you received the balance against something. If you are not able to show then the income tax officer may add that balance amount to the sale price you received and the entire amount will be subjected to capital gains tax. That is why I suggest routing as suggested in point 1
3. for purpose of calculating capital gains, the cost of acquisition will have to be deducted from the sale price. Now your title document shows purchase price of 7 lacs whereas you actually paid 23 lacs. I doubt if the income tax officer will allow any amount which is not shown in your title document
4. yes capital gains tax can be saved if capital gains is invested in a residential house. There is no restriction if the person already owns other properties
5. you have to file ITR before the due date of filing of returns as applicable to you. otherwise you will be liable to penalty for late filing of returns
The purchaser in order to save few thousands on stamp duty is completely acting foolish. He is forgetting that when he sells this property in future, he can deduct the full 36 lacs from the sale price which he would get, which essentially means that his capital gains will be reduced and he will have to pay lesser capital gains tax.
Yes the said thing attract you provisions of evading stamp duty and registration charges and providing false information to public authority
Hi you have lot of questions in this regard however please note that if you are receiving sale consideration can bank transfer entire amount is taken as a sale consideration and the stamp duty is payable on the same amount if the registration of the property is made at the lesser value the difference of stamp duty will be payable and it will create problem in declaring the sale proceed in income tax please note that the property is registered on Circle rate or market value whichever is more so in case you are receiving the market value you have to pay the stamp duty at the same rate and for the calculation of indexed cost you have to consider the complete amount of consideration to calculate the long term capital gain and pay the capital gain tax accordingly you will have problem from income tax in case you take laser value and your declaration in this regard will definitely will be the part of your income tax return to avoid all these issues it will be good idea to register the property at its market value which is 36 lacs hope everything is clear
1. It is the buyer who has to answer to this question and not the seller, since you will be properly accounting the entire sale consideration amount and the same will be properly reflected in the ITR.
2. Dont listen to rumours. Long term capital gains taxes have to paid as per law.
3. Whatever value declared in the registered sale deed shall be taken into consideration for computing the capital gains tax.
1. If you are questioned about the under value then you can easily escape the situation stating that the buyer only has to pay the additional stamp duty as per sale consideration amount paid to you. The deficit stamp duty has to be borne by the buyer alone and not the seller.
2.You have nothing to do with the capital gains tax since you have already reflected total sale consideration amount in your ITR. This is a matter of deficit stamp duty, which has to be replied by the buyer only and not the seller.
3. You can produce the papers in your possession for capital gains tax purpose only. Now this undervalue sale deed is the problem of the buyer and not yours.
4. You have to buy another house property out of the capital gains amount, ther is no such thing that you should not have any other house other than this.
5. ITR should reflect all the income received in that fiscal year.
The registrar will charge the circle rate for the stamp duty if the consideration amount is less than the circle rate, however if the consideration amount is more than the circle rate, then the stamp duty has to be paid for the value of the sale consideration amount.
The money received by you has to be accounted in your account and that will be a substantial proof for the amount received through sale consideration.
The registrar will charge the circle rate for the stamp duty if the consideration amount is less than the circle rate, however if the consideration amount is more than the circle rate, then the stamp duty has to be paid for the value of the sale consideration amount.
The money received by you has to be accounted in your account and that will be a substantial proof for the amount received through sale consideration.