sam (designer) 23 December 2014

Tax for land sale after price rise

My sister brought a land from a seller in outskirts of a city and the seller brought the land around 4 years ago.

My sister executed an agreement of sale nearly two months ago and the land was registered in registration office 2 days. In the two month intervals, the guideline value of land arose more than 20%. My sister brought the land at the cost original guideline value(price is around 17 lakhs).

The seller is saying that he would require to pay around 20% more tax as sale deed was excuted as per new guideline norms. The pan card of the seller was used only as identification card only.. The seller has reinvested the money in another property with the profit earned in land sale. Does the seller need to pay extra tax. The seller says the need to super tax as he declared the profit earned with old guideline value. Please give some suggestion to avoid this tax.
Thanks in Advance

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3 Replies

Adi Patel (NA) 23 December 2014

The taxable income for the seller will be considered as the value on which the Property is finally registered irrespective of at what amount you got in the agreement of sale.

So, if you have registered the land purchase at higher (new) rates, definitely the seller will have to pay at the new rates.

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T. Kalaiselvan, Advocate (Advocate) 23 December 2014

As a buyer you need not worry about the vendor's tax liability. Whatever the vendor has to pay as a tax will depend on the sale consideration price which is mentioned in the registered sale deed document. Your liability is extinguished there when you have settled the sale consideration amount in full, the vendor has no rights to ask you to pay him the super tax or meet his house hold expenses. Ignore it, if he is insisting on it, ask him to approach the court for recovery

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sam (designer) 24 December 2014

thanks very much for valuable comments. Keen to end the transcation of sale with the seller in a happier way, we're trying to do our best from our side.