Hi There I am hoping someone can help me in this area of law. I fully understand the capital gains rules for rural agriculture land as well as that fact that it is "legally" allowed to sell property above stamp duty value and sale should always be registered at actual sale price and transaction done via bank only. That is what book says and I am aware of that. May question however is based on what actually happens on the ground in Govt registrar offices. I am told Registrars / Tehsildars do not allow sellers / buyers to register a sale above stamp duty, hence seller is forced to receive difference between stamp duty value and actual sale price in cash. I am told registrars enforce this as registering one sale on higher price will mean they will face issues when they register any adjoining lands at lower price (stamp duty value). As most people do not want to pay higher tax, everyone forced to transact in cash component to cover the differences. Question is, as a seller how can I declare that cash component to keep my money in the white? If my buyer has all the money (fully market value) in white, can I get full amount via bank transaction instead of cash and what will be tax implications for both of us?
Ask a question and receive multiple answers in one hour.
Lawyers are available now to answer your questions.
You can insist that actual sale consideration be mentioned in sale deed
pay stamp duty on market value mentioned in sale deed and not the circle rate
don’t pay any amount in cash
you are aware that payment by cash of more than 2 lakhs is an offence under income tax and penalty equivalent to amount received by you can be levied under income tax act
payer is not liable to pay penalty
The situation what you have discussed here is not the law of the land, this may happen in some places and not everywhere.
Assuming that an event similar to what you have described here, if you go by the advise received to receive the excess amount beyond the sale consideration amount through bank transaction itself, the amount received through bank cannot be denied hence you can show the excess amount as income from other sources, and you don't have to specify the other source in the ITR.
Firstly you make sure that the registration of the property is executed by the buyer paying the actual, sale consideration amount shown in the sale deed which may be more than the government guidelines value, if the Sub-registrar is denying to register the property to the value higher than the government guidelines value, then you can approach the District registrar with a complaint against the sub-registrar and seek his direction to the sub registrar to register the same as per the value paid by the buyer which is the prevalent market price.
If you do not want to take this trouble then you can think about the alternate option as suggested above.
Dear Client,
If you're receiving a cash component as part of the property transaction, it's crucial to declare this amount accurately to tax authorities. Failing to do so can lead to potential legal and tax consequences in the future. You should report this cash component as part of your income during the relevant tax year. This ensures that your income tax filings are in compliance with the law. Keep thorough documentation of the entire transaction, including any cash component received. This documentation should include the sale agreement, receipts, bank statements, and any other relevant paperwork. Having a clear paper trail can help support your case in case of any inquiries from tax authorities. Both you as the seller and the buyer need to consider the tax implications of the transaction. Sellers typically incur capital gains tax on the profit made from selling the property. If you receive a cash component, this amount would still be subject to capital gains tax. As for the buyer, they should be aware that paying a portion of the transaction in cash doesn't absolve them of their tax obligations. They should ensure that they have proper documentation for the entire transaction to avoid any legal issues. If both parties are willing, conducting the entire transaction through bank transactions can help ensure transparency and legality. However, this may require cooperation from all parties involved, including the registrar's office.
Yes you can get the same through banking channel if the funds are of known source
You whole amount can be shown as white amount fully market value what seller will be getting from buyer.
There is a formula of inflation value and according to that you need to pay tax, that is very nominal as compared to price what you will be getting today.
