I’m executing an irrevocable General Power of Attorney (GPA) for a plot I purchased in 2021 in Bangalore, and I’m receiving fair market value as consideration under the GPA. However, there is no registered sale deed executed yet—only the GPA. How should this transaction be treated in my Income Tax Return (ITR)? Will it be considered a capital gain or treated differently under current tax laws?
Will not the sec 2(47) of the Income Tax apply here, and this transaction be treated as a capital gain? As per sec 2(47), under definitions of 'transfer' other than a sale deed, other scenarios are also considered . Can you please help clarify my doubt? sec 2(47) - https://shorturl.at/XoZca
- If the sale deed will be executed in the F.Y. 2025-26 then it would be a transfer for the income tax purpose
- TDS implications may also arise
Just to clarify- this GPA will be a registered GPA, registered in the sub-registrar office, and the GPA holder is paying 5% stamp duty to register the GPA. (Note- Stamp duty for a sale deed is 6.5%, for GPA is 5%). Will these details change the conclusion discussed in my case?
In case of immovable property where sale deed or conveyance deed is not executed and registered then the transfer for the purpose of capital gain is complete and effective on fulfillment of the below conditions:
- There should be contract in writing
- The transferee has paid consideration
- The transferee has taken possession of the property
- Sale through GPA does not transfer ownership in the property to the transferee. Such transaction may also be treated as benami transaction
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No, the conclusion does not change.
Even if the GPA is registered and 5% stamp duty is paid, it does not amount to a legal transfer of ownership under property law or Section 2(47) of the Income Tax Act.
Capital gains tax will apply only when the registered sale deed is executed, not at the GPA stage.
Legally ,
It gives legal authority to the GPA holder to act on behalf of the owner in matters defined in the GPA (e.g., sale, lease, mutation).
However, even a registered GPA does not transfer ownership of the property. Ownership can only be transferred through a duly executed Sale Deed.
Supreme Court of India in Suraj Lamp & Industries Pvt. Ltd. v. State of Haryana (2011) clarified:
"A GPA does not convey title nor creates any interest in immovable property. It merely authorizes the attorney to act on behalf of the principal."
Paying 5% stamp duty makes the GPA legally enforceable, but it does not equate to a sale under law.
Sale Deed Stamp Duty (6.5%) is what legally transfers title.
Hence, even with a 5% duty-paid GPA, capital gains or ownership-related issues would still be evaluated based on whether a sale deed was executed.
