• Property Transcations

Dear Sir/Madam,

If a buyer buys stamp paper for circle rate and registers at a lower consideration value than the circle rate ,need to know what is the implication for the buyer and the seller as in for the tax.

Is the capital gain tax calculated based on the registered value or the circle rate ? Also if the buyer proposes to pay the difference between the circle rate and consideration value by means of cash , 
can such cash amount be deposited in banks based on the deed value as per the  circle rare for which stamp paper was bought.

Believe any transactions in the registering office more than 30L will be informed to the income tax dept, does this transaction refer to the sale consideration value or the circle rate based on which stamp paper is bought. If a buyer mentions less sale consideration than the circle rate , how is he benefited. 

Upon completion of transactions , with in how may days/ months can we open an Capital gain account in the bank.  

When we talk about improvement charges while calculating capital gain tax , what are all the charges these include and do we need to show the proof for such expenditures
Asked 1 year ago in Capital Gains Tax from bangalor, Karnataka
Dear Sir,

1. If a buyer buys stamp paper for circle rate and registers at a lower consideration value than the circle rate, then at the time of selling the property in future, Cost of acquisition of the property would be lower and it will lead to higher capital gain tax. 

Further, seller of the property will be taxed based on the circle rates even if the registration is done at lower rate.

2. If the registered value is lower than circle rate than capital gain tax will be calculated based on the circle rates. Yes, i think you can pay via cash but you have to show the source of cash when asked for.

3. 30 Lakhs refers to the registration amount.

4. you can open as soon as possible but not later than the return filing date i.e. 31July.

5. Yes, you have to show proof of improvement when asked for. Interior decoration, floor addition, immovable furniture etc. can be claimed as improvement.

Please feel free to call/revert in case of any doubts

Thanks and Regards
Abhishek Dugar

Abhishek Dugar
CA, Mumbai
2936 Answers
123 Consultations

5.0 on 5.0

1) Capital gain based on higher of circle or registered value rate. difference taxable in hands of buyer as well seller
2) Not advisable 
3) registrar need to inform ITD transaction where value exceed 30 lacs.
4) Before due date of filing of return you can open capital gain account
5) Addition / improvement in asset or expenses incurred to protect or complete title.
Saket Jain
CA, Greater Mumbai
23 Answers

4.7 on 5.0

Hello Sir,

If you buy a Property than a circle rate then the amount of benefit your have received will be taxed under the head Other Sources.

For the Seller, the Circle Rate will be considered as the Sale Consideration.

Trust this clarifies your query. 

Feel free to call / get back in case of further clarifications. 

Thanking You. 

Rohit R Sharma
Rohit R Sharma
CA, Mumbai
2104 Answers
91 Consultations

5.0 on 5.0

Ask a Chartered Accountant

Get tax answers from top-rated CAs in 1 hour. It's quick, easy, and anonymous!
  Ask a CA