I bought a flat in 2008 for 11 lakhs funded by bank. But sale deed with the builder was for 6.5 lakh. now i wan to sell my flat for 17.5 lakh. my prospective buyer wants to enter an agreement and sale deed also for 17.5 lakh. how will my capital gains be calculated, is it by deducting 11 lakhs (loan amount from the bank) or by deducting sale deed amount(6.5 lakh) from 17.5 lakh.
The calculation for capital gains will be on the cost as per the sale deed. However you will be eligible for indexation benefits for computing the capital gains.The loan repayment to bank will not be eligible for deduction.
Thank you for the replies, My Agreement with the builder was for 11 lakhs and bank has sanctioned a loan of 11 lakhs based on their evaluation of the property. I paid 11 lakhs to the builder but sale deed was for 6.5 lakh only.If i enter a sale deed for 15 lakhs with the buyer but take 17.5 lakhs will i be doing any thing wrong.
Dear Sir, This is the first time I am hearing about such a transaction where the sale deed is for 6.5 Lakhs but the bank has funded you 11 Lakhs. In your case Capital gain will be calculated on the difference of Rs.6.5Lakhs, the amount stated in your Sale deed and Rs.17.5 Lakhs the amount at which you are selling now. If you enter into a sale deed of Rs. 15 Lacs and take Rs.17.5 Lakhs then the excess amount of Rs.2.5 Lakhs would be Black Money. Now it is upto you to enter or not to enter into such a transaction. Trust this clarifies your query. Please feel free to call/ get back in case of any further clarifications. Thanking You. Regards, Rohit R Sharma BCOM, ACA, LLB-GEN, CERT. FAFP
It will compulsory be 11 lakhs as cost of acquisition. Any how if you received 17.50 Lakhs for the property in any form whether 15 lakhs in sale deed or 17.50 lakhs in sale deed you need to calculate tax based on taking 17.50 lakhs as your sale proceeds.