Tax liability on property acquired through auction

1. In normal scenario if the purchase value is less than the stamp duty value or circle rate and the difference is more than 5% one needs to pay tax on such difference amount u/s 56.

2. However if the property is received under a public auction by court then the value paid in such auction would be final value and no need to pay any additional tax.

Was the property auctioned by NBFC was through public auction by court or government authorities, If yes then you will get benefit of point no. 2 and that will be your cost of acquisition.

If no then you need to show difference amount as your income as mentioned in point 1 and then that increased amount would be your cost of acquisition.

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Thank you.

There are cases where in case of auction sale Madras high court has said that stamp duty would be charged on sale consideration decided in auction and not market value.

It can questionable but if your state stamp duty act also have such provision then you wont be required to show any additional income or additional tax.

For this you must have a word with some advocate or with the NBFC who sold you this flat to you.

- COA will be the actual cost paid for the property and the stamp duty and registration fees will be paid on actual cost only.

Dear Sir,

Hope you are doing well !!

The COA would be the actual cost paid for the property.

Dear Sir,

Hope you are doing well !!

The COA would be the actual cost paid for the property.

Hello,

The Cost of Acquisition would be the actual cost of the property through auction.

I hope that this answer satisfies your requirements. 

Regards,

CA Hunny Badlani

For further understanding, you can contact us directly or take a phone consultation.