• Capital gain tax of inherited property

Hi - I have a property inherited from my father. Can you please advise what i should consider as capital gain calculation in the below scenario.

Father brought the property in INR 10,000,00 ( 10 lakhs) -

Current valuation is INR 1,70,000,00 ( 1.7 CR)

Sales Price Market Price is INR 1,20,000,00 ( 1.2 CR )

I plan to register the property @1,20,000,00 as consideration but buyer will pay the stamp duty for 1.7 CR. 

What should i consider as sales price for me for capital gain calculation ( 1.2 CR or 1.7 CR). 

Kindly advise any complexities with respect to this.

Thanks
Asked 5 years ago in Capital Gains Tax

Hi,

- Nothing less than stamp duty would not be acceptable. You have to pay capital gain on stamp duty value.

Thanks

Vivek Kumar Arora
CA, Delhi
4825 Answers
1030 Consultations

5.0 on 5.0

Dear Sir,

Hope you are doing well !

You will have to pay capital gain on Stam duty value.

Thanks & Regards,

Payal Chhajed

Payal Chhajed
CA, Mumbai
5188 Answers
288 Consultations

5.0 on 5.0

Hi

The capital gains shall be calculated by considering the higher of the actual sales value or the Stamp duty value. So, 1.7 cr shall be considered as sales value for for you.

When was the property bought by your father? The costs shall be indexed from the year of purchase and reduced from sales value to arrive at the capital gains.

Further, you may opt for reinvestment options for exempting capital gains. That could be by investing in a residential house property or 54EC eligible bonds.

Lakshita Bhandari
CA, Mumbai
5687 Answers
908 Consultations

5.0 on 5.0

So here when you will pay capital gain or calculate capital gain tax you will have to consider 1.7 cr as your sale consideration and calculate capital gain tax on same and since you are an NRI you will have to get your TDS deducted on capital gain amount @20.8% from the buyer by getting a capital gain tax certificate from your income tax officer.

When buyer shows the purchase at 1.2 crore instead of 1.7 crore he will have to declare 50 lakhs as his income from other sources so in such case such 50 lakhs have been taxed twice so it's better to show sale and purchase both at 1.7 crore so that there will be no discrepancy in transaction and you don't have to face any notice from income tax department.

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you

Naman Maloo
CA, Jaipur
4265 Answers
96 Consultations

5.0 on 5.0

Hi,

You will have to show sale price as 1.7 crores because in income tax authorities will receive the information from registrar office.

Don't show sales consideration as 1.2 crores.

Abhishek Dugar
CA, Mumbai
3576 Answers
183 Consultations

4.8 on 5.0

Hi,

You will have to show stamp duty value as sale price i.e.1.7 crores otherwise you may get notice from income tax department.

Accordingly,you can avail the benefits of exemptions by investing in another house under Section 54. You can also avail the exemption by investing your capital gains in bonds under Section 54EC.

Karishma Chhajer
CA, Jodhpur
2450 Answers
29 Consultations

5.0 on 5.0

Sale price should be considered as 1.7 crores, higher of valuation price and sale consideration

Vidya Jain
CA, Kolkata
1008 Answers
58 Consultations

4.8 on 5.0

Hi,

The cost shall be considered as 1.7cr as the same has been picked by stamp duty authority.

Thanks

Damini

Damini Agarwal
CA, Bangalore
405 Answers
31 Consultations

5.0 on 5.0

Hi,

You will need to pay capital gains on Stamp duty value of the property.

Nikhil Khanna
CA, Mumbai
1429 Answers
19 Consultations

4.8 on 5.0

Please show the sale price as 1.7cr to avoid any complications in future.

Nikhil Khanna
CA, Mumbai
1429 Answers
19 Consultations

4.8 on 5.0

Hi,

- He needs to deduct TDS on 1.7 cr and not on 1.20 cr otherwise he will be liable for short deduction of TDS.

Vivek Kumar Arora
CA, Delhi
4825 Answers
1030 Consultations

5.0 on 5.0

Further, TDS needs to be deducted on full amount i.e. stamp duty value.

You may take the benefit of exemption either by reinvesting in a residential house property u/s 54 and or by investing in 54EC eligible bonds.

Payal Chhajed
CA, Mumbai
5188 Answers
288 Consultations

5.0 on 5.0

Capital gain will be calculated on the basis of stamp duty i.e. 1.7 cr not on sale proceeds

Nitin Jain
CA, Jaipur
214 Answers

4.7 on 5.0

Hi

capital gain will be calculated on 1.7 CR .It is adviable to declare 1.7 Cr as sales consideration .

TDS to be deducted by buyer on full sales consideration that is 1.7CR ,so its better make transaction at full value.

Swati Agrawal
CA, Mumbai
1146 Answers
7 Consultations

5.0 on 5.0

If you are selling the property below the registration value, you'll still be liable to pay CG as if the stamp duty value is your selling price.

Further the difference between the actual sale consideration and stamp duty will be considered as a gift and assessed as income u/s 56 in the hands of the buyer.

You can submit a representation before the stamp duty authority to consider the actual consideration for the levy of stamp duty. You may also file a case in the appropriate court contesting the stamp duty valuation. The your actual sale consideration can be considered for computation of CG.

B Vijaya Kumar
CA, Hyderabad
1001 Answers
124 Consultations

5.0 on 5.0

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