• Are stamp duty & registration charges part of acquisition cost of property

Are stamp duty & Registration charges part of acquisition cost of the property and total sum of these is to be indexed for arriving at the acquisition cost of the property for the purpose of calculating LTCG. Also please advise what does "expenditure wholly and exclusively in connection with transfer" consist of. Also, kindly advise if i have to deduct TDS of 1% on every instalment I pay to builder for an under-construction property(valuing more than 50 lacs) or i can deduct the whole TDS(1% of total) from the final instalment to be paid to builder while taking the possession of the flat.
Asked 1 year ago in Capital Gains Tax from New Delhi, Delhi

Hi,

Yes, registartion charges and stamp duty value is part of cost of acquisition and should be indexed.

Expenditure wholly and exclusively in connection with transfer could be in the nature of brokerage paid to the broker.

You will have to deduct TDS from each installment.

Abhishek Dugar
CA, Mumbai
3576 Answers
173 Consultations

5.0 on 5.0

Hi

Yes, stamp duty and registration charges shall form part of cost of acquisition of property and can be indexed. However, if 80C deduction was claimed in the year of purchase in respect of such expenses, then double deduction shall not be provided and these expenses shall not form part of COA.

Example of such expenses is brokerage paid for such transfer of property.

No, TDS deduction @ 1% shall have to be made on each and every payment made to the builder.

Lakshita Bhandari
CA, Mumbai
3848 Answers
190 Consultations

5.0 on 5.0

Hi,

Yes, registration charges and stamp duty value can be included in the cost of acquisition and should be indexed.

Expenditure wholly and exclusively in connection with transfer would mean all those expenses that were directly related to the transaction. Eg. Brokerage, registration charges, etc

Please deduct tds from each installment that you pay.

Regards,

Nikhil.

Nikhil Khanna
CA, Mumbai
1428 Answers
19 Consultations

4.8 on 5.0

Dear Sir,

1) Stamp duty and registration cost are treated as part of cost of acquisition and will be indexed for the calculation of long term capital gain.

2) Expenditure incurred wholly and exclusively for the purpose of transfer is brokerage, commission and advertisement expenses.

3) Yes you need to deduct TDS @1% on every installment if the total consideration exceeds RS.50 lacs and needs to submit Form 26QB.

Thanks

Vivek Kumar Arora
CA, Delhi
3221 Answers
166 Consultations

5.0 on 5.0

1.Yes stamp duty and registration cost form part of cost of acquisation and indexation benefit is available.

2.Tds to be deducted on each payment,cannot be deducted at once.

3.Any expenses incurred specifically for that transaction is included in wholly and exculsively like brokerage cost incurred for transfer.

Swati Agrawal
CA, Mumbai
1146 Answers
7 Consultations

5.0 on 5.0

HI,

Yes Stamp duty and registration charges forms part of acquisition cost.

Expenditure wholly and exclusively in connection with transfer means those expenditures which if not incurred prior or during, the transfer itself cannot be complete like registration fee, legal fees or any charge which directly effects the sale transaction without which it wont be possible to carry out the sale.

Yes, it is required to deduct tax on every installment for property valuing more than 50 lacs.

Thanks & Regards,

Damini

Damini Agarwal
CA, Bangalore
337 Answers
25 Consultations

5.0 on 5.0

Stamp Duty & Registration charges does form part of cost of Acquisition.

In case law

Gopee Nath Paul & Sons Vs. D.C.I.T. 3/8/2005 (2005) 147 Taxman629(Cal.)

It was held that,

any amount the payment of which is necessary for transferring the asset will be treated as expenditure incurred wholly & exclusively in connection with such transfer.

Further ,

Under section 194c people other than Individual & HUF are required to deduct TDS.

Chirag Maru
CA, Raipur
180 Answers

5.0 on 5.0

yes

Shiv Kumar Agarwal
CA, Delhi
302 Answers
68 Consultations

5.0 on 5.0

Stamp duty & Registration charges are part of cost of acquisition.

Expenditure wholly and exclusively in connection with transfer consists of all costs like Stamp duty,Registration Charges, Brokerage etc which are exclusively connected with the Transfer

Yes. You need to deduct 1% TDS on each installment

Pradeep Bhat
CA, Bengaluru
477 Answers
39 Consultations

5.0 on 5.0

Ask a Chartered Accountant

Get tax answers from top-rated CAs in 1 hour. It's quick, easy, and anonymous!
  Ask a CA