• Property buy and sell related taxation query

Hello ,

I had purchased a land in Bangalore in March 2016 .The price mentioned on the sale deed was somewhat more than the guidance value of the area . However the total payment made to the seller through bank transfer was much higher .
The price on the sale deed was less than 50Lakh Rs hence TDS was not paid.
My question is as a buyer do I have any tax implication or issue in future since as per sale agreement and bank transfer a much higher amount was transferred to the seller?
Asked 1 month ago in Capital Gains Tax from Bangalore, Karnataka

Dear Sir,

 

Hope you are doing well !!

 

The rule is that Stamp Duty and Registration Charges should be paid on higher of two values i.e. Market Value or Circle Rate.

 

The buyer (you) will have to pay stamp duty on the difference between the market rate and the circle rate at the time scrutiny If this case is caught up.

 

Next consideration is cost of acquisition when you will be selling the property. You shall only be eligible to claim the costs that have been mentioned in the sale deed registered  Thereby the capital gains would be more and more taxes shall have to be paid.

 

 

 

Payal Chhajed
CA, Mumbai
3730 Answers
50 Consultations

5.0 on 5.0

Please note that all the cash/bank transactions are being monitored. Any unusual cash transactions from a bank account will immediately put seller/buyer under the scrutiny of income tax department.

 

It will be there in form of some assets, and department has elaborate systems of curating useful information.

 

 

Payal Chhajed
CA, Mumbai
3730 Answers
50 Consultations

5.0 on 5.0

As far as buyer is concerned he is not under any obligation if he has paid higher amount as the seller needs to explain the credit entries in his bank statement.

However I am not able to understand why would a seller pay higher amount in cheque and wont disclose in deed as by not doing this he wont be able to claim such amount paid in cheque as his cost.

 

In the extreme circumstances, if seller says that such amount was paid by buyer then AO might attract section 69B and you as well as seller might be asked to pay tax under 115BBE as this is punishing section.

 

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
2688 Answers
24 Consultations

5.0 on 5.0

Hello,

 

Ther could be two implications for the buyer, First, the demand of the stamp duty on the differentiate amount and on further sale of such property, cost of acquisition would be as per sale deed and no the actual payment made for the property.

I hope that this answer satisfies your requirements.

 

Regards,

CA Hunny Badlani

Badlani & Associates

Hunny Badlani
CA, Madhya Pradesh
1587 Answers
5 Consultations

5.0 on 5.0

Registration should be done at the actual consideration paid for the property, which should be at least the circle or stamp duty value of the property.

The seller, on disclosure of the actual sale consideration, could be demanded the additional tax on the differentiate sale proceeds.

Hunny Badlani
CA, Madhya Pradesh
1587 Answers
5 Consultations

5.0 on 5.0

Hi Shwetank,

 

Following arr the downsides to the buyer in respect of the above transaction:

 

1. when you sell this house, you will get a deduction for lower cost of acquisition (which is mentioned in your agreement) and it will lead to higher capital gain.

 

2. Stamp duty authorities can ask for higher stamp duty. Because you need to pay stamp duty on actual value off transaction

Lakshita Bhandari
CA, Mumbai
4255 Answers
239 Consultations

5.0 on 5.0

If the has paid capital gain tax considered sales consideration as the value mentioned in registered sales deed, he will have to pay additional taxes since actual sales consideration was an higher amount.

Lakshita Bhandari
CA, Mumbai
4255 Answers
239 Consultations

5.0 on 5.0

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