I had purchased a 500 yds plot @Rs. 8000 about 8 years back by paying 25% ( Rs. 10 lacs) upfront and the balance was to be paid at the time of possession. Possession is now due. However, I plan to sell it. The developer will transfer the booking to the new buyer. The new buyer can then pay balance and get the plot registry done in his favour. The current market price is about Rs. 15,000/-/ yd. The buyer will pay me Rs. 10 lacs which I paid to developer plus Rs. 35 lacs premium all by cheque. The circle rate is also Rs. 15000 too. ITR asks for full value of consideration received. I am receiving Rs. 45 lacs but as such full value is Rs. 75 lacs. My cost of acquisition is Rs. 10 lacs but actual cost to me would have been 40 lacs if I had paid. What should I disclose as full value of consideration and actual cost? Also since circle rate value of 75 lacs has to be mentioned in ITR there is a problem in showing 45. Further since I am receiving less than 50 lacs from buyer do I need to deduct 1% tds?
Hi,
Im my opinion, what you are selling is a "right to buy the property at particular rate" and not the property because property has not yet transferred in your name.
Thus, you should not show it as sale of immovable property but sale of right in immovable property. The cost of which would be 10 lacs and sales consideration would be 45 lacs.
TDS should not apply in this scenario.
Further, the drafting of sale agreement is very important and should be draft carefully.
So that means in ITR 2 in capital gains schedule it should be shown under 9a(ii) and under 9b(i) indexed cost can be taken instead of 10 lacs?
You are not selling the plot.
You are selling the right in the plot and hence the provision of stamp valuation or circle rate wont apply to you.
This will be a tri party agreement where you will agree to let go your right for 45 lakh to the buyer.
You dont have to deduct any TDS.
Your capital gain would be 45 lakh less indexed cost of 10 lakh.
Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.
Thank you.
Dear Sir,
Here is my replies to your queries:
As you mentioned that property will not be transferred in your name and will be directly transferred to the name of the ultimate buyer and you will just sale the "right to purchase" (Right to Purchase is a capital asset) the property to the ultimate buyer. In that case the computation of income will be like this:
Sale Consideration- 45,00,000
Cost of Acquisition- 10,00,000*
Capital Gain - 35,00,000
* COA should be indexed as per the index rate.
Thanks and Regards
Divya Chugh
Yes, you can take indexed cost instead of 10 lacs. Not sure about the schedule. I need to check the return form.
Hello,
Since you are selling only the right to purchase the property and not the actual property, therefore you need to declare it as sale of right in the immovable property.
Full value of consideration would be Rs. 45 Lakhs and cost of acquisition would be Rs. 10 Lakhs which will be indexed till the year of sale.
TDS deduction won't be required in such case.
I hope that this answer satisfies your requirements.
Regards,
CA Hunny Badlani
Would be advisable to take the help of a practicing CA for the filing of the income tax return to avoid any error.
Dear Sir,
- The full value of consideration would be 45 lakhs and actual cost would be indexed value of 10 lakh.
- Provision of stamp valuation or circle rate will not be applicable as you are only selling right in plot.
-TDS deduction won't be required in said scenario.
It should be shown under 9b(i)