I want to sell a plot on my name for 50 lakh and agreement of sale will be prepared for that amount. Buyer will register sale deed for 6 lakh as that is government rate. Now capital gain will be calculated on sale agreement value or government rate? I want to reinvest this capital gain in buying a house for tax exemption.
Hi,
Capital Gain will be calculated for actual sale proceeds i.e Rs 50 Lakhs
and as you are planning to invest in buying a house, you can claim capital gain exemption. for whole capital gain amount.
i would suggest buyer should also register sale deed for rs50 lakhs. otherwise he will be in a loss at the time of reselling the flat, as his cost of acquisition will be Rs 6 Lakhs.
Dear Sir,
There can not 2 agreements one for buyer and one for seller. Existence of two different agreement for same transaction shall amount to legal violation. If you are taking 50 Lacs through official channel and agreement is signed for that amount stamp duty must be paid on that value only and capital gain shall also be calculated on the said amount, irrespective of government rate.
The simple principle is go for higher rate of following for capital gain purpose
- Government Rate
- Actual Sale Rate
Hi,
The Sales proceeds considered for Capital Gains is the Actual Amount received or Government Valuation whichever is higher (In your case it will be Rs. 50 Lakhs) less any expenses incurred by you for the Sale like Brokerage, Registration Charges, Stamp Duty etc (If paid by you)
Hello Sir,
How can you make the agreement of sale for Rs.50 Lacs & then the Registered Sale Deed for Rs.50 Lacs. It is like unnecessarily inviting trouble.
I would suggest making both of them for Rs.50 Lacs only.
Trust this clarifies your query.
Feel free to call / get back in case of further clarifications.
Thanking You.
Regards,
Rohit R Sharma
BCOM, ACA, LLB-GEN, CERT. FAFP
Thank you for all the clarifications. From my point of view, I want to be on the right side, so the sale agreement is made for the full amount of Rs. 50 Lakhs and that is what I am showing as capital returns for this transaction. But the seller is getting the registration done at the government evaluation rate. I just wanted to confirm that this would not cause any trouble to me in the end. From what I have understood, the sale agreement would still be considered because it is higher than the Government valuation.
Hello Sir,
Yes, you are correct.
Trust this clarifies your query.
Feel free to call / get back in case of further clarifications.
Thanking You.
Regards,
Rohit R Sharma
BCOM, ACA, LLB-GEN, CERT. FAFP
Yes
Yes from income tax prospective there is no issue if you show higher sales value than government rate.
hi,
no it wouldn't cause you any trouble.
yes, sale agreement is the valid proof, due mention the details of cheque numbers or demand drafts oe any other mode of payment received from the buyer.
Dont take any payment in cash.
Dear Sir,
The capital gain tax will be calculated considering the actual sale proceeds i.e Rs 50 Lakhs. You can claim capital gain exemption for whole capital gain amount by investing in new residential house.
Please feel free to revert in case of any doubts
Thanks and Regards
Abhishek Dugar
CA CS B.Com
If you are getting 50 Lakhs through Cheque or through bank channel then you have to pay capital gains on 50 lakhs .If you are showing 50 Lakhs as capital gains and invest this 50 lakhs in purchase of another property then you can get benefit
