~~~~~Rahim (Entrepreneur) 06 October 2016

Stamp duty calculation sarfaesi act income tax act

Kindly help me to understand the tax implications regarding the mentioned case:

Mr X has acquired a seized flat through e-auction from a Bank. NPA The fair market value or stamp duty valauation is Rs 80 Lakhs but during e-auction he purchased it for Rs 45 Lakhs.

    Will the Corporation attract Stamp Duty on FMV or purchased price? The purchaser is liable to pay stamp duty for transfer of property.
    Since the deed must mention the higher of Circle Rate and Purchase Price in Sale Deed on which rate of Stamp Duty is charged, how are these different rules harmonised in this case?
    Since Mr X might sell this flat in future what amount should be taken as cost of purchase to calculate Capital Gain?

What are the rules for NPA acquired through Bank which by its nature will dispose off assets for far less than fair market value.

Kindly clarify and thank you.

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5 Replies

rajeev sharma (Advocate Ex senior manager law ) 06 October 2016

Under SRFAESI ACT the auction is made by aauthorised officer and sebsequent to sale a sale cerfifiate is executed. As peer provosion of the Registration Act schedule I- B Art 18 purchaser of the property auctioned by an officer authoised by law to conduct sale and execute the sale certificate , requires registration and the consideration in such sale certificate is taken equal to the amount of purchase money. In simple worda the the amount of auction sale is the amount on which the stamp duty is to be paid.

since the property is purchased in auction done by a public authority hence Income Tax may not consider the value of the property at higher but at the same time IT deptt while calculating the capital gain on the property will also take the value on which it was accquired.

~~~~~Rahim (Entrepreneur) 06 October 2016

Thank you Mr Rajeev Sharma. Sir kindly provide any provisions of any Act which mentions auctiobed property to be treated differently when transfeerred.

rajeev sharma (Advocate Ex senior manager law ) 08 October 2016

that provision hs already been mentoined in my earlier post.

rajagopal.s (Lawyer.) 11 October 2016

Stamp duty and registration charges are to be paid at the Market value prescribed by the government at Sub-Registrar offices.

it is immaterial whether the property was purchased at a lower price through auction under SARFASEI or otherwise.

The sub-registrar can permit the registration of the property only when the stamp duty and registration charges are paid as per market value prescribed by the government .

So while computing capital gains for IT purpose at a later date, you need to consider your purchase price plus Stamp duty and registration charges paid when assessing your cost of acquisition.

Hope this helps.

Rajgopal