Land registration

Sir as per Income Tax Act,1961 if you are purchasing the property (Document value) less than the government value (Whether you pay the Stamp duty on Govrn Value) then the difference will be taxed as other sources.

U/s 56 (2)(vii) of the Income Tax Act, if you buy an immoveable property at less than the stamp duty value, the difference between the stamp duty value and the market value shall be deemed to be your income, even though you might have actually paid the market value, which is less than the stamp duty value.

You may dispute the stamp duty levy before the sub registrar as per the procedure laid down u/s 50C, then there will not be deemed income as mentioned above.

Hi,

You are a buyer of the property. As per Section 56 (2) (vii) (b) of the Income Tax Act, if any individual receives any immovable property for a consideration less than the stamp duty vale of the property by an amount exceeding Rs. 50,000, then the difference between the stamp duty value and the actual consideration paid shall be taxable as Income from Other Sources.

However, if you feel the property is overvalued by the concerned authorities, the you can dispute the same. In such a case, the Assessing Officer will be bound to refer the case to a Valuation Officer and the Value assessed by the Officer so appointed shall be taken as the value of the property.

Good Afternoon Ji

you required only Rs. 12 Lakhs for above mentioned transaction and you can registered your Land for Rs. 12 Lakhs and save Stamp Duty accordingly.

Dear Sir,

In case you buy any property below the stamp duty value you have to pay the tax on differential value (I.e. 12 lacs in the instant case).

However, you can challenge the stamp duty value before stamp authorities. In case autjorties agrees that actual rate is lower than stamp duty value, you don't need to pay taxes on differential amount

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

Thanks and Regards

Abhishek Dugar

CA CS B.Com

Hi,

in your case - seller is selling the land at lower price though as per government rates are higher then seller's rate.

So in that case the difference between Circle rate and the price which is being quoted by the seller will be your income from other sources (If the difference is more than Rs 50000/-). it does not matter how much money should be in your bank account.

While doing the registration you are required to pay the stamp duty on the higher value (i.e actual sale price or the government rate). In your case it is government rate. otherwise you will fall under section 50C.

Below is the link- which clearly explain Section 50C

http://www.charteredclub.com/tax-on-property-transaction-below-circle-rate-section-50c-sec-56/

Hello Sir,

The point of maintaining Rs.24 Lacs in your bank account as stated by your CA has no relevance at all. If the agreement is made for 12 Lacs, then you need only 12 Lac in your bank account.

Secondly, in your case since there is a difference between the circle rate and your agreed consideration, then according to the Income Tax Act, the difference (which in our case is Rs.12 Lacs) will be taxed under the head Income from Other Sources.

Next is what you can do in case you wanna avoid paying higher taxes and higher stamp duty, then you may ask for a market assessment to the registrar, wherein he will have to get the land valued by a registered valuer and if the valuation provided by the valuer is lower than the figure quoted by the registrar then you will be benefited and will have to pay tax on the value provided by the registered valuer. This will help you save Income Tax as well as Stamp Duty.

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