Guidance value vs market value and impact on capital gain

Shivnath Shaw (Querist) 12 January 2021 This query is : Resolved
I am looking to buy a property in Bangalore whose market value is 70L. But its circle value/guidance value is 55L only. The seller is saying that he will mention 70L on sales deed, but we can go for registration at circle value which is 55L. First question, is it possible?
The seller is saying that this will help to save some money for me.

Now if I sell this property in future , than capital gain will be calculated based on circle rate (which was 55L when I purchased) or the actual market price which was 70L at that time. The seller is saying this will be calculated on market value of 70L and not on circle value of 55L, please help me with correct legal guidance.

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When buying property in Bangalore, the seller may suggest registering the sale deed at the lower guidance value (circle rate) instead of the higher market value to save on stamp duty. However, stamp duty is calculated on whichever value is higher. Crucially, for future capital gains tax calculations, the amount shown on the registered sale deed, not the guidance value, will be used as your purchase cost.

kavksatyanarayana (Expert) 12 January 2021
No. for any purpose, the Market value or the consideration whichever is higher be taken in such cases. However, consult al local senior CA.

Isaac Gabriel (Expert) 12 January 2021
Actual registered consideration shall be taken into account. What the seller suggests is the right choice.

Message likes : 1 times

kavksatyanarayana (Expert) 15 January 2021
In Karnataka, the market value or consideration whichever is higher is the criteria to levy stamp duty.

Rajendra K Goyal (Expert) 19 January 2021
If 70 lacs is mentioned on the registration documents, stamp charges has to be paid on 70 lacs and not on guidance value (Circle Rate).

In future if you sell the property, capital gains would be calculated on amount shown on the deed.

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