• Stamp Duty on Registrartion

I intend to buy a Land in KERALA 10Cents @5L /cent Market Value = 50L 
Government Fair Value is 2L/cent = 20L 

I am ready to Pay 10% Stamp duty on 20L ie @2L and have No objection paying Rest 30L through Bank to the seller , a Genuine white deal , as the seller (NRI)insists to get full white money .However , I am reluctant to pay Rs3L stamp duty on the 30L , as it is not part of fair value and is the Market value part .In this scenario I would Llike to know the Following 

1) Can I make an Valid agreement to Purchase the Property for a Total Consideration of 50L but Register the Land at its fair value of 20L?What type of agreement/contract it shall be , to be a Valid one acceptable to both Buyer and seller . 

2) If I make a Transfer to his NRE account through my NRE account for the Rest 30L , will it draw any Questions from Land Registration department in Kerala , or am I supposed to pay Stamp duty on entire 50L ?

3) For the seller , what will be the difference on Tax payment Criteria , if I make payment of 20L as Land fair value for which he will have to pay under a Capital Gain Tax scheme and the 30L under IT act . 

4) what will be the impact of the same, if I decide to resell the Property after now showing Fair value of 20L and Market value of 30L seperatly ?
Asked 6 years ago in Property Law
Religion: Christian

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9 Answers

1. No you have to pay stamp duty on sale value only.

2. You need to pay stamp duty for 50 L only if in sale deed same is mentioned if you mention 20 L in sale deed to save stamp duty then you have to.justify the transaction of rest 30 lakh in account of seller before the income tax authorities as they can send notice and also the seller.

3. Capital gain indexation is there it would be on 50 lakh only that is seller part .

4. It cannot be shown separately it can be done separately only if the transaction done through cash  unaccounted.

Shubham Jhajharia
Advocate, Ahmedabad
25513 Answers
179 Consultations

1) To save little amount now and get life time trouble by any of reason in the future. You might not know what will come as trouble in future for you.

 

2) It's better to get a fair deal of Rs.50 lacs registered with registrar and mentioned in the agreement too, better to have all white amount deal.

Ganesh Kadam
Advocate, Pune
13008 Answers
267 Consultations

Sale deed should be executed at ready reckoner  or circle rate 

 

2) if you are paying Rs 50 lakhs for purchase of property sale deed should not be registered at lower rate . You have to pay stamp duty on Rs 50 lakhs paid to seller 

 

 

3) 

section 50 C of income tax act if property is sold for rate below the circle rate then circle rate would be determined to be sale price of property by income tax authorities and capital gains tax levied accordingly to the seller

4) if you claim that fair market value is below the circle rate then in such case I0 would request valuation officer to carry valuation of property

5)  the valuation determined by valuation officer would be sale price of the property if valuation determined by valuation officer is lower than circle rate

6)  if valuation officer determines sale price to be higher than circle rate than circle rate would be deemed to be sale price of property

7) under section 56(2) vii) in case of buyer the difference between sale price and circle rate would be determined to be the income of purchaser and taxed under head income from other sources

 

Ajay Sethi
Advocate, Mumbai
99783 Answers
8145 Consultations

That will be undervalued registration. 

Yes entire amount tax and duty to be paid. 

You need to pay it in accordance with law

Prashant Nayak
Advocate, Mumbai
34515 Answers
249 Consultations

Stamp duty payable on price which is higher , so on sale price . Duty will pay on entire amount and if you will show 20L in sale deed than rest amount cannot be made in white otherwise it will be evasion of stamp duty. 

Buy in 20L and rest 30 give him as gift .

20 CGT , 30 ITax 

You can show only 20L as purchase price.

Yogendra Singh Rajawat
Advocate, Jaipur
23081 Answers
31 Consultations

1. You have asked "Can I ...........................but Register the Land at its fair value of 20L?". Please note that land is not registered. What is registered is the Sale Deed and you shall have to pay the stamp duty on the market value or the price that has been mentioned in the Sale Deed, whichever is higher. 

 

2. Ads stated above, you shall have to pay the stamp duty on the entire amount of Rs.50 lakhs to be paid by you as consideration for buying the said property.

 

3.The Registrar will not accept stamp duty on Rs.20 lakhs if the sale deed to be registered shows tyhe consideration as Rs.50 lakhs. 

 

4. You shall have to mention the consideration which you have paid to buy the property and register the said deed. by paying the stamp duty. If you show that you have paid only Rs.20 l;akhgs and then pay the vendor Rs.30 lakhs seperately, then I.Tax will bwe chsrged on the entire amount of Rs.30 l;akhs consideraing it as his earning and will not get any benofit of long term capital gain received by selling the property.

Krishna Kishore Ganguly
Advocate, Kolkata
27703 Answers
726 Consultations

  1. Sir, agreement to sale is that document which has been made prior to sale deed.
  2. Once sale deed is registered then amount written in the agreement to sale won’t have any sanctity in the eyes of law and in fact, registrar may put question also as to why there has been differences of amount in agreement to sale and sale deed.
  3. Yes, if you wish to show the 40 L transaction as part of the sale deed then you may be put questions by IT department as why this amount when sale deed is of less amount.
  4. You can be held liable for evasion of stamp duty which is a punishable offence.

Sanjay Baniwal
Advocate, South Delhi
5477 Answers
13 Consultations

1. the market value and fair value cannot be stated separately under two agreements

2. any one value has to be stated

3. if the market value is stated in agreement then the seller will have to pay capital gains tax on that value - minus permissible deductions and you will have to pay stamp duty on 50 lac i.e. the market value

4. if the fair value as determined as per government valuation is stated then seller pays lesser capital gains tax and you pay lesser stamp duty. However the balance will have to be either routed or paid in cash

5. if you use the market value, then even if you may be paying higher stamp duty now, in the future when you sell this property, you will have the benefit of deducting the entire market value plus stamp duty from the sale proceeds that you will receive on the sale. Thus greater liability now will be offset by the future benefit 

Yusuf Rampurawala
Advocate, Mumbai
7899 Answers
79 Consultations

1. The stamp duty shall be applicable to the value of consideration amount mentioned in the registered sale deed.

The dealing between you the seller is different to that of the registered sale deed which will contain the total sale consideration  of the property.

2. For the purchase of property from a NRI, you have to deduct tax at the rates fixed as applicable. When an NRI sells property, the buyer is liable to deduct TDS @ 20%. In case the property has been sold before 2 years(reduced  from the date of purchase) a TDS of 30% shall be applicable.

3. As per the Indian Income Tax Act, when a resident purchases any property from a non resident, he has to deduct income tax (TDS) and pay the balance amount to the seller. He has to deduct 20% of the sale consideration as tax before making the net payment to seller.

4. There wont be any impact on this because you will be selling the property at the prevailing rate then.

T Kalaiselvan
Advocate, Vellore
89984 Answers
2492 Consultations

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