Buying an auction property under sarfesai act

Dear Sir,

No, you do not need to pay income tax on difference amount of auction price and govt valuation.

However, Properties under Bank Auctions are sold on “As is Where is & What is There is Basis” which implies Bank does not take any responsibility regarding Title of the property i.e. on encumbrance front, No liability of Bank. In the event of any legal dispute or any other claim on property, Bank does not indemnify the buyer from same. The complete responsibility of encumbrance rests with Buyer for auctioned properties.

It is always advisable to take help of Local Competent Professional Property Lawyer before participating in Bank Auctions as he can help you in understanding the rules and regulations. He can also help you to check Property Title and encumbrance on property (If any).

Dear Sir,

Hope you are doing well !!

Under SRFAESI  ACT the auction is made by authorised officer and subsequent to sale a sale certificate is executed.

Since the property is purchased in auction done by a public authority hence Income Tax may not consider the value of the property at higher but at the same time IT deptt while calculating the capital gain on the property will also take the value on which it was acquired. 

Thanks & Regards,

Payal Chhajed 

Hi,

- You need to get the property registered on govt. valuation i.e. payment of stamp duty will be on govt. valuation. You are purchasing property so no question of income tax arises.

Thanks

Hi

Since you are buying property,you have to pay stamp duty.Capital gain tax arises in case of sale.

Stamp duty will be payable on govt valuation amount.

Hope it helps

First of all do check proper ownership of the property in such cases.

The property will be registered and stamp duty and since you are saying auction price is less than stamp duty value therefore you will have to declare difference amount as your income from other sources u/s 56(2)(vii) and pay income tax on same or else you can fight for same with income tax department since public sector is providing you such property.

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

Thank you

Hi

You need to pay stamp duty at the government value only.

However, since the auction is made under the SARFAESI Act, there would be no income tax implications in view of section 56 (2) of the Income Tax Act.

As per Section 50c of Income tax , Sale value which will be considered for capital Gain is higher of-

1.) Sale value.

2) Stamp Duty valuation.