• Proof agreement to sell

Mr.X is selling a property ,a piece of land . The land has an agreement to sell which is the actual sale value. However , the buyer wants to register the property on govt guidance value , the guidance value is less than the agreement to sell value...As a tax payee, can we file returns on the value in agreement to sell . Will this work ..X has an agreement to sell that was used when X bought the land. Please can you advise . Also what is tax percent post indexation.
Asked 2 years ago in Capital Gains Tax

1) The difference between the agreement value and guidance value is obviously the cash component. If cash is paid for the difference, any cash transaction for Rs 2 Lakhs and above attracts penalty u/s 269ST of the Income Tax Act in the hands of the seller. Also there is a risk of Income Tax search if the cash component is significant and the property value is high. 

2) The seller will be assessed for capital gains on the sale value as per sale deed and is entitled to indexation, exemptions and concessional rate, if the capital gains are long term.  However, the seller will be assessed for the difference amount as other income u/s 56 and will be assessed at normal slab rates. 

3) The tax percentage post indexation is 20%+4% of 20% towards Health and Education Cess. Surcharge will be varying from 10% to 15% depending upon the quantum of LTCG.

I suggest that the seller may insist upon registering the actual sale value only to avoid additional tax liability and penalty. 


B Vijaya Kumar
CA, Hyderabad
1001 Answers
124 Consultations

5.0 on 5.0



The registration should be done at the actual sale value else it could attract the tax in the hands of the buyer u/s 56(2)(x) if the consideration is less than the stamp duty value and (Stamp duty value - Consideration) is > Rs.50,000 and  10% of consideration [whichever is higher]

Also be mindful that the cash payment should not exceed Rs. 2 Lakhs as it can attract penalty u/s 269ST of the Income Tax Act in the hands of the seller. 




Prerna Peshori
CA, Pune
194 Answers
11 Consultations

5.0 on 5.0

- Ideally sale consideration should be equal in all the property documents (i.e. agreement to sell, sale deed, receipts etc.). If the variation between the guidance value and the actual sale consideration is more than 10% then guidance value would be considered as sale consideration otherwise actual sale consideration. If there is any cash component amounting to Rs. 2 lacs or more then recipient is liable to pay penalty of equal amount.

- If actual sale consideration is less than the stamp duty value by more than Rs. 50k and 10% of the consideration then buyer is liable to pay tax on such difference as Income from other sources. 


For detailed discussion you may opt for phone consultation.

Vivek Kumar Arora
CA, Delhi
4840 Answers
1037 Consultations

5.0 on 5.0

Respected Sir,

As per Section 50C, if a capital asset, being land or building or both, is transferred for a consideration below the stamp duty value, then such stamp duty value shall be the deemed value of the consideration for the purpose of calculating capital gain under Section 48. The original consideration paid for the transfer shall not be considered for the purpose of capital gain in the hands of the seller.

However, if the date of an agreement fixing the amount of consideration and the date of registration for the transfer of the capital asset is different then the stamp duty value as on date of agreement may be taken for the purpose of computing full value of consideration. Provided that the amount of consideration or a part thereof has been received by way of an account payee cheque or account payee draft or use of electronic clearing system through a bank account, on or before the date of the agreement for transfer.

Finance Act 2018 (applicable with effect from 01st April 2019) has amended the applicability of Section 50C only in those cases where the stamp duty value exceeds one hundred and five percent of the consideration so received or accrued for the transfer of capital asset, being land or building or both.


Thanks and Regards

Shiv Kumar Agarwal
CA, Delhi
489 Answers
74 Consultations

5.0 on 5.0

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