Upgrad LLM

group of 5 friends like to purchse 10 plots in bank acution

incharge projects

Hi,

5 members of my class mates planned to purchase 10 plots through bank auction ( bank is auction as single sale for 10 plots). all my firends are out side the country. so we decided that I will particpate in auction as self  and not as group. upon confirmation from the bank to me, I will first register in my name and latter I will register plots to my 5 friends accordinlgy as an when they come to India

Three doubts I have on this and please clarify the same :

1) in this kind of situvation what I opted is right method,  is there any better option?

2) as my friends are transfering amount to my saving account and I am inturn bidding the auction and doing the online payments to banker through my saving account. As I am doing transaction through my saving account do I fall in to any income tax constrains?

3) as banker is selling the property at Rs 500 per sqyd and the government rate is Rs 1000 per sqyd and registration cost is 6% of the government rate or purchase rate which ever is higher. I will get it regisitered from banker to me at rate rs 500 per sqyd but eventually I have to pay 6% of the government rate i.e, on Rs 1000 per sqyd, but when I register to my firends I am planning to mention that they have purchased from me at rate of Rs 1000/- per sqyd as we are ending up in paying registratrion fee to that extent in any case, but for every plot of 200 sqyd, the banker is registering at rate 1 lakh and I am registering to my friends at 2 lakhs and in this case I am not getting any money but do I fall in short term capital gain?

Please advise for all these

 

Regards

RK

 
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Lawyer.

Hi 

You will be liable for 

a) incurring  stamp duty and registration charges at prevalent market rate when you sell the agreement to your friends.

b) You will be liable for capital gains tax when you sell the property to your friends. 

c) Also the receipt of the money from your friends will also be treated as taxable income unless and until you have a sort of an agreement (loan, finance etc)

d) the best way would be to get the Power of attorney from your friends, create an instrument that you will bid in action as a power of attorney holder and when registration happens, you as a power of attorney holder for your friend can register the property directly in their name. 

 

 

 
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incharge projects

Hi,

Thanks for your reply which has cleared my substantial doubts.

As auction is already done two back and getting power autorney may not possible in current situvation.

I would like to know about the aggreement option, were I can I have it over email, as my firends are at different parts of world, one UAE and four are USA at different locations.

Please can you share some aggreement format in this regards 

Regards

Ravi Kiran

7032652822

 
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