Taxes on retainable land
Eswar
(Querist) 10 June 2008
This query is : Resolved
We had some ancestral property. We had an agreement with the society (name not mentioned) to sell at a nominal rate in 1970's. Govt said we cannot sell as we have excess land. GO was passed after 20 years to sell the land(retainable) and society approached us to register us the lands in their names. They promised to give nominal amount slightly higher than what was agreed upon in 1970's. we agreed on moral grounds. Now the govt is asking us to pay the taxes on the govt rate.
Govt rate was around Rs. 6000 per sq yd and we sold it for Rs.65. Now govt is asking us to pay the tax amt of Rs 1 crore 20 lakhs as there was an amendment in the law done sometime in 2004 or 2005 where the law says that we need to pay the tax even if we sell the land for a lower rate than the govt specified rate or give the land as a gift. This is Andhra Pradesh. Please advice on what needs to be done to come out of this situation.
Srinivas.B.S.S.T
(Expert) 11 June 2008
get affidavits of the persons or person representing the society about the rate at which you have sold the land and file an appeal challenging the orders of the tax collector. But you must tell me at what rate you have executed the sale deeds i mean the rate you have disclosed at the registar's office at the time of registration.
Guest
(Expert) 11 June 2008
Section 50C of the Income Tax Act, states that for the purpose of ascertaining capital gains, the rate fixed by the Competent Authority for the purpose of Stamp Duty shall be the value for the which the property should be sold or the tax should be paid.
Is the transfer by way of Court order under specific relief act or without court intereference.
If it is by court iorder, then you have a case, but out of court, it is dangerous.
Eswar
(Querist) 11 June 2008
Are there any exceptions to the rule to the question where the sale consideration and the market value are different and what is the liability of the vendor/seller? Is it always the case where the tax has to be paid on which ever is higher between these 2(market value of the property & sale consideration). Are there any exceptions. We have sold the land which is under section 9(3) of urban land cieling act for a lesser price than the market value. we would like to know if the exception applies to this. please let me know.
Guest
(Expert) 11 June 2008
On the urban land sold by you, you will be laiable to Income TAx of the capital gains.
The sale considerations for the purpose of computation will be as per 50C.
Check your Stamp authorities, if they have a undervaluation team, then a guidance value for the property will be fixed.
Such value will be market value. Your sub registrar would not have registered for a lesser price than the market value fixed by hi superior authority.
Eswar
(Querist) 12 June 2008
Thanks for the advice. We already sold the land and under writer did not consider this clause nor the sub registrar. Now we got summons from the court to explain and declare tax returns. Underwriter does not know the new law which was amended in 2004 or 2005 that 'that we need to pay the tax even if we sell the land for a lower rate than the govt specified rate or give the land as a gift.'. Could you please advice us on how to come out of this situation. We have sold it on Moral grounds and it is hitting us so bad as the amount they are asking is around 1 crore.
Guest
(Expert) 12 June 2008
The stamp authorities must have fixed a market value, consider that as the market value and if you have mentioned the actual rate or market value, then you can convince the authorities.
IN AP I understand, that the Stamp authorities issue a certificate before the registration commences fixing the market value, if the amount mentioned by you is the same as mentioned in the certificate, there should not be any problem.
