• Proof of sale & purchase price for unregistered property for tax


I bought a property in May 2013 and I am selling it next week for the same price. It is an unregistered property, but ready to occupy.

The buyer wants me to handover the original receipts I paid the builder as he argues that the old agreement of sale and construction agreement should suffice to establish purchase cost of property. Please let me know whether the original agreement of sale and construction agreement will suffice for tax purposes.

Also, there is a tripartite agreement between the builder, seller (me) and buyer that has the resale cost. I hope that will suffice to establish the capital zero loss/gain in my case?
Asked 1 year ago in Capital Gains Tax from United States
 a right to obtain conveyance of immovable property is  "property". Therefore, if the booking agreement and allotment terms and conditions of the builder gave a right to obtain conveyance on the said flat, the property after fulfilling certain conditions, that itself becomes "an asset" under the Income-tax Act. Date of investment in the property will be the date of allotment of the residential flat and the payment of installment is a follow up action. Allotment is a sufficient compliance for getting the benefits, even if the taxpayer has not paid all installments due under the said scheme.
so it is crucial to check what is the date of agreement and if conveyance is being obtained in the said property, if it is may 2013, then it falls under long term capital gain and you can indexed the cost of purchase. i believe then in your case there will be a loss on sale of flat.
otherwise it will be short term capital gain. then there is no profit arising  in your case. then no capital gain , but still you need to file a return showing sale of flat under capital gain.
And yes you can go head with sale of flat .with the above mentioned documents. Do make a sale agreement.
Buyer is required to deduct 1% TDS in case of seller is resident indian or 10% in case of NRI seller. if the value of purchase property is more than RS 50Lakhs.
Vishakha Agarwal
CA, Bangalore
435 Answers
56 Consultations

5.0 on 5.0

Dear Sir,

We need to see the agreement in order to properly understand the transaction.

Please post the important clauses of the agreement here or mail me the agreement.

Thanks and Regards
Abhishek Dugar
Abhishek Dugar
CA, Mumbai
2936 Answers
123 Consultations

5.0 on 5.0

Hello Sir,

The Documents appear to be reasonable to prove your Purchase Price but I would suggest to also get a Valuation done in order to be sure that you are not making a Sale Agreement which is at a Value less than the Stamp Duty Value.

If it is more then it should suffice.

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

The fact is that you have purchased the property in May 2013 but it has not been registered in your name . Now you want to sell the property to some third person .
Technically  this property is a capital assets and you are holding the capital assets . Registration is not mandatory document as far as the tax is concerned . The law says that if you are if the capital asset is held by a person for less than 3 years than the capital gain arising from the transfer of that is the short term capital gain . 
Hence in this case the sale value minus the amount paid for the purchase of the flat will be short term capital gain in your hand .  Please keep the original receipt as well photo copy of all the documents which builder has given to you till date for the purpose of establishing your cost of acquisition .
Tripatriate agreement between you , buyer and the builder is for that purpose of the registration by the builder in the favour of buyer .
Prakash Sinha
CA, New Delhi Area, India
120 Answers
16 Consultations

4.9 on 5.0

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