Seller needs to execute registered sale deed with the buyer for the said transaction. Seller needs to invest the same in capital gain bond or other property to avoid capital gain tax. The said amount must be reflevted in income tax return. Different values are shown to evade stamp duty but nowadays registration is done in ready reckoner price which is a govt approved rate for said property. If you register the same no penalty can be imposed. No buyer source or income has no effect. Being a seller there is no implication of a common deed it will attract common stamp duty. The proper description of property carpet area consideration etc has to be described.
Property sale
My mother and her one brother and one unmarried sister individually hold 3 separate and respective pieces of adjoining lands, each admeasuring approx 0.75 katha. These ownership arose out of a family partition deed after death of my grandmother in whose name the property was earlier lying. The 3 members have made a prima facie verbal deal with an interested buyer. I have following queries: 1. As a seller what is the step by step correct procedure and due diligence my mother must follow (Income Tax, deed registration, etc. perspective)? Please guide in detail so that there is no harassment later because of ignorance. What procedure should be followed to avoid any notice/penalty at later date? 2. What is the difference between Land value and Market Value. Is market value the selling price? What should be the relation ideally between two? What can be legal consequences if both are shown different? 3. What should be the mode of payment receiving legally? I have learnt that cash transaction is prohibited. Can transaction details be incorporated in deed? 4. Where must transaction details be entered correctly wherefrom it is traced by authorities so that there is no penalty later? 5. How to ensure registration and receipt of payment simultaneous? 6. What will be income tax implication on sale and how to save tax? 7. How to ensure that only my mother’s tax implication falls on her and not default of her brother/sister in case of a common deed (which we don’t want)? 8. Does my mother need to bother on the source of income of the buyer? Will it affect her legally in any way in future? 9. Buyer is urging us to make one common deed of all 3 sellers citing extra charge. What charges he has to bear? My mother and me desire to make separate deeds. How to convince the buyer? What can be the future possible consequences if we make common deed. What should be the ideal procedure? 10. What list of details need to be incorporated in either case: common deed or separate deed?
Asked 7 years ago in Property Law
Religion: Hindu
7 Answers
Is the deed of partition between mother and her siblings duly stamped and registered
2) agreement for sale has to be executed between sellers and buyer
3) mere verbal agreement is not sufficient
4) buyer should pay 10 per cent as earnest money . There should be clause that it would be forfeited if buyer fails to pay within stipulated period
5) sale deed should be executed as per the circle rate or ready reckoned rate
6) section 50C of the Income-tax Act, 1961 clearly mentions that the liability on capital gains would arise on the value of the property as fixed by the state valuation authority which generally is the Sub-Registrar. Thus, capital gains tax would be calculated on the value of the property as fixed by the Stamp Valuation Authority especially when such value is higher than the declared value of the property as appearing in the sale deed.
7)as per 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
8) don’t take money in cash . Take money by cheque or bank transfer
9) sale consideration details should be mentioned in sale deed
10) make 3 separate sale deeds
1) This is ancestral property and for all your income tax questions there is one answer that you have to follow Index ratio and calculation ratio accordingly.
2) Once you puts the date of purchase of land and selling price accordingly Index ratio you will come to know that how much Income tax you mother has to pay or not or your mother can buy NABARD's Bond or invest that amount in Real Estate.
3) On is market value and government value , government value is calculated on Ready Reckoner.
4) Yes, you can make common deed for sale.
5) There is no consequence as you are selling the property is good the buyer that all three seller are present at a time and registering the property, its save time.
There is considerable confusion over the taxes applicable on the sale of an inherited property. While many think that the money received on sale of an inherited house is fully tax exempt, others feel that it is fully taxable.In reality, there is no tax liability at the incidence of inheritance. However, any profits made on the sale of an inherited, are taxable as capital gains.
Land value is the value of a piece of property including both the value of the land itself as well as any improvements that have been made to it.
The market value of a property is the price at which that property is exchanged between a buyer and a seller on the date of valuation/ execution of its instrument. The transacting parties should act knowledgably, prudently and without any compulsion.
1. Stamp duty on consideration amount has to be paid by the buyer along registration deed needs to be registered. Before sale deed registration buyer need to pay complete amount and further in case it is agriculture land no income tax liability on same.
2.For sale selling value is decided for registration and stamp duty. Circle rate is the minimum prices decided by the government.
3. By cheque DD or bank transaction. Yes it is compulsorily incorporated.
4.Sale deed complete details can be mentioned of payment and land.
5. See first sale agreement can be made on receipt of all payments timely only sale deed has to be made.
6.See it is agriculture land then no tax in case non agriculture there shall be capital gain tax which can be managed by purchasing other house property or investing in government bonds as under section 54 income tax act.
7. Tax is individual liability it will not fall her anyway, they all were individually receive there share amount.
8.If see payment is made by cheques or any bank transaction then it is not your liability about source.
9. Stamp duty and registration along with the lawyer fee. Joint sale deed is also not bad option. There are no consequences if they receive there payment individually.
10. Your engaged advocate shall draft a deed of sale for same for you. If common separate consideration for all three can be shown.
If your mother is an absolute owner of the proeprty which is intending to sell, she should first have a clear and marketable title o the property by a registered partition deed or at least a mutation records from the revenue department to show that she is the owner of the property now proposed to sell.
She should also provide the copy of the parent document to the prospective buyer.
If there is any TDS then she should agree for it and obtain a certificate from the buyer after TDS to that effect so that she can file ITR accoridnlgy.
For LTCG she should consult a CA who will calculate the same and pay the same accoridnlgy or can file a petition for exemption under the provisions of section 54 of income tax act.
2. Market value is the value of the property sold by you, there is no such thing called land value, it may be the government guidelines value. The sale consideration amount received by her shall be the market value which shall be higher than the guidelines value.
3. The mode of payment shall be by cheque or DD or bank transfer viz. RTGS or any other valid mode of transfer.
4. The details of the cheque or DD or any other mode of payment should be correctly mentioned in the sale deed.
5. For registration she shall be personally present in the registrar's office and the payment receipt shall be given by her to the buyer.
6. Read the 1st answer above..
7. You can ascertain the sale consideration received by her and inform your auditor about it accordingly.
8. No, she need not bother about it.
9. If the property remained unpartitioned and in joint possession then the buyer's request can be acceded but since the properties have been partitioned now, all the three should execute a a separate registered sale deed which will avoid future legal hassle, however there is provision for the three owners selling the property together jointly by a single sale deed also.
10. The details to be entered in the joint sale deed or individual deed shall be the particulars of the buyer and seller, description of properties, the source of title and the previous title holders particulars as well as how the previous owner acquired this property etc.
1. Since your mother has inherited the said property, she won't have to pay any capital gain tax for selling the same ordinarily. However, the I.Tax department might chaqrge capital gain tax on the difference of the market value of the property while inheriting it and its sale price.
2. Market value is the price at which the land in the adjoining area is being sold currectly. The term Land value is commonly used denoting the price at which the land has been actually sold.
3. Avoid cash transaction. If you mention a price lower than the market vlue, the the I.Tax department will considered that the difference between the market value and your price mentioned in the sale deed is the earning of the buyer and he will be taxed accordingly.
4. You submit an application for query sheet before the Registrar giving the details of your property seekling to knbow how much stamp duty and registration fee you shall have to pay. You shall be informed as to what is the market value or circle rate of your said property for calculating the standp duty amount.
5. to 7. Already answered above.
8. Your mother need bother about the source of income of the buyer. the payment should be through bank to stay safe.
9. His extra charge is marginal in the form of lawyer's and his clerk's fees for registering three deeds. The stamp duty which is the major component of the expenses, will not decrease in case he makes one sale deed.
10. It will be qa standard sale deed detailing, inter alia, the property, its flow of title and the receipt of the consideration. Contact a local lawyer to deal with the matter.
