If you are going to sell a property then a number of points are to be kept in mind which are explained below :
1. The sales consideration if lower than value adopted or assessed by any authority of State Government then as per Section 50C such value as assessed or adopted by an authority of State Government shall deemed to be the full value of sales consideration under section 48 for the purpose of calculating long term or short term capital gain as the case may be.
2. In case the date of agreement and date of registration are different, in such case the value adopted or assessed or assessable by the stamp valuation authority on the date of agreement may be taken for the purpose of computing full value of consideration provided the amount of sales consideration or a part thereof is received by an account payee cheque or bank draft or electronic clearing mode.
3. In case the value adopted or assessed by stamp valuation authority of State Government does not exceed 5% (10% w.e.f. 1.4.2020) of actual value then the actual sales consideration shall be deemed to be full value of consideration for the purpose of section 48.
4. The assessee can claim before Assessing Officer that the value assessed or assessable by an authority of state Government is more than fair market value of the said property and such value assessed or assessable by an authority of state government has not been disputed in any court or high court, then the Assessing Officer may refer the case to departmental valuation officer under section 55A.
5. In case the departmental valuation officer gives a report that fair market value is as given by assessee then no action shall be taken. In case the value as given by Departmental valuation officer exceeds or is as per value assessed or assessable by stamp valuation authority of state Government then such value shall be deemed to be full value of consideration as per section 48.
6. Here the assessee can challenge the valuation as calculated by Departmental Valuation Officer before the Assessing Officer and appellate authorities.
7. Apart from above while selling the property no amount exceeding Rs. 20000.00 or more can be taken or accepted otherwise than by an account payee cheque or bank draft or electronic mode as prescribed in Section 269SS otherwise an amount equal to the amount taken or accepted shall be imposed as penalty under section 271D. Section 269SS is applicable even on sale of agricultural land.
If you are going to buy a property then a number of points are to be kept in mind which are explained below :
1. The purchase consideration if lower than value adopted or assessed by any authority of State Government then as per Section 56(2)(x) such value as assessed or adopted by an authority of State Government shall deemed to be the full value of purchase consideration (Difference of Rs. 50000.00 shall be ignored). However if the property is purchased from a relative then this section is not applicable. The definition of relative is given in Section 56(2)(vi).
2. In case the date of agreement and date of registration are different, in such case the value adopted or assessed or assessable by the stamp valuation authority on the date of agreement may be taken as purchase value for the purpose of section 56(2)(x) provided the amount of purchase consideration or a part thereof is paid by an account payee cheque or bank draft or electronic clearing mode.
3. In case the value adopted or assessed by stamp valuation authority of State Government does not exceed 5% (10% w.e.f. 1.4.2020) of actual purchase consideration then the actual purchase consideration shall be deemed to be full value of consideration.
4. The assessee can claim before Assessing Officer that the value assessed or assessable by an authority of state Government is more than fair market value of the said property and such value assessed or assessable by an authority of state government has not been disputed in any court or high court, the the Assessing Officer may refer the case to departmental valuation officer.
5. In case the departmental valuation officer gives a report that fair market value is as given by assessee then no action shall be taken. In case the value as given by Departmental valuation officer exceeds or is as per value assessed or assessable by stamp valuation authority of state Government then such value shall be deemed to be full purchase value and excess shall be deemed as income from other sources.
6. Here the assessee can challenge the valuation as calculated by Departmental Valuation Officer before the Assessing Officer and appellate authorities.
7. In the purchase value is Rs. 5000000.00 or more than a sum equal to 1% of the purchase consideration is required to be deducted from the amount payable to seller under section 194-IA and the amount so deducted has to be deposited to the credit of central government with 30 days from the end of the month in which tax was deducted and TDS certificates are also required to be downloaded and given to seller. Even when sellers are more than one and individual sales consideration does not exceed Rs. 50.00 Lakhs or more even then tax is required to be deducted. If tax is not deducted then the buyer shall land himself in litigation and losses.
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I have some personal matters related to Income Tax applicable when buying the property.
Would you like to reply to those matters. If so, then please do confirm. I will explain those matters to you.
Good article Pravesh. Can you pl add the tax exemption explanation of any gains if property x is sold within 2 years of purchase of propeorty Y?
I sold a property in Kolkata at 34.50 lacs last week which i brought at 13 lacs in 2006. I want to invest the whole amount in another commercial property which i brought in 2018 or residential . What should i do?