Tax on long term capital gains


Hi... Had bought a flat at 65 lakhs in 2008 and now Iam selling the flat at Rs.83 lakhs but the buyer is registering it as per the present guidance value which is higher ie @ Rs.97 Lacs. Need to understand the tax implication on the long term capital gain. am I liable to pay 20% on the 14lakhs for which I will not be actually getting that 14lakhs. Please advice on the best possible solutions on how i can avoid or reduce capital gain tax on this 14lakhs? Appreciate if anyone can provide me any input on the same. Thanks 

 
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Practicing Lawyer

Hi 

If you are actually selling the flat at a consideration which is less than the stamp duty value (guidance value), you can dispute the guidance value before the Sub-Registrar and ask him to register the property at consideration value.  Even if he does not agree, you should register the same at agreed price, by paying registration fee at guidance value, and report capital gain calculated on the basis of agreed price.  I am sure you have a fit case for litigation before Assessing Officer, who would be bound to refer the same to DVO.

 

Thanks

 
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You can register a property at a value lower than guidance value. There is no bar to do so.

Why a guidance value exists is because you can't pay stamp duty on any value lower than this. 

 

Amend your agreement. You will still be required to pay stamp duty on 97 lac but will only be taxed in so far as capital gains goes, on your actual selling price.

 
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Hi Rohan..

 

Thanks for your response. If I am to amend the agreement and pay stamp duty at the guidance value of 97lacs , the sale proceeds would state 97lacs . So during captain gain computing how can i show that I actually sold at 83 lacs? Please advice.

 
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ADVOCATE

YOUR QUERY: Had bought a flat at 65 lakhs in 2008 and now Iam selling the flat at Rs.83 lakhs but the buyer is registering it as per the present guidance value which is higher ie @ Rs.97 Lacs. Need to understand the tax implication on the long term capital gain. am I liable to pay 20% on the 14lakhs for which I will not be actually getting that 14lakhs. Please advice on the best possible solutions on how i can avoid or reduce capital gain tax on this 14lakhs?

REPLY:  If the buyer is giving you Rs 83 L only as the price, how can he insist that Rs 97 lakhs be shown as the price?

You need show only the actual sale price in the Sale Deed. Before the SRO, you/ the buyer (who will bear the Stamp Duty, you, or the buyer?). may have to pay the Stamp Duty as if the Sale Price is Rs 97 lakhs. Before the Income tax Assessing Officer, you need only disclose the actual sale price and the Capital Gains accordingly. The AO will follow the procedure prescribed in Section 50C of the Income tax Act 1961.

 
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Mr. Rajagopal...Thank you sir, for your response.

 

Ok so I need to disclose the actual sale price ie 83 Lakhs to AO and calculate capital gains accordingly. So what does  Section 50C of the Income tax Act 1961 prescribe ? I didn't quiet understand this section. Please advice

 

Thanks

 
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Thank you sir

 
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