Difference between sale deed and sale agreement values for calculation of capital gain tax

Hello,

While filing the income tax return, there are two declarations under the Capital Gai Head, 1. Sale Price and Value of the property as per the Stamp Valuation Authority. Since you would be declaring the actual sale price Rs. 80 Lakhs in your income tax return and pay tax accordingly, there won't be any problem for you from the department. The receipt of Rs. 80 Lakhs actual sale price in a bank account would be sufficient proof. No addition would be made in the Other Sources Head for the difference amount since you would pay the due tax on the capital gain income.

But declaring Rs. 80 Lakhs as sale price would sure shot fetch notice to he buyer for the stamp duty due on the difference amount, as evaded by the buyer.

Regarding TDS, TDS deduction is the responsibility of the buyer. And in your case, since the buyer is registering the property at Rs. 52 Lakhs, he would deduct TDS on the same and not on Rs. 80 Lakhs. Even if he deducts TDS at Rs. 52 Lakhs, this won't be an issue for you since you would be declaring the correct Capital Gain and pay due tax on it in your income tax return.

I hope that this answer satisfies your requirements. 

Regards,

CA Hunny Badlani

Dear Sir,

Hope you are doing well !!

The rule is that Stamp Duty and Registration Charges should be paid on higher of two values i.e. Market Value or Circle Rate.

The buyer (you) will have to pay stamp duty on the difference between the market rate and the circle rate at the time scrutiny If this case is caught up.

Next consideration is cost of acquisition when you will be selling the property. You shall only be eligible to claim the costs that have been mentioned in the sale deed registered  Thereby the capital gains would be more and more taxes shall have to be paid.

There are many situations like this but you need to understand that you won't have any issue if you show this amount as sale consideration, but your buyer will have issues because he can receive notice u/s 69B for undisclosed investment and second when he will sell this property in future he will be able to claim deduction of 52 lakh i.e. the amount mentioned in sale deed.

Regarding point number 3 he might says that you have received income from unknown sources and just to save tax you have shown it under capital gain.

Buyer would deduct TDS @52 lakh as he will show 52 lakh as his consideration.

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you 

Hello Sir,

Please find below the replies:

-There would be no issue for you provided you will have sufficient proof for amount received. It is advisable to receive the entire amount through banking channel.

-No, there would be no further tax liability on you as you will be showing the full sales consideration while filing ITR.

The difference amount will not be treated as income from other sources.

.Note that the buyer is required to deduct TDS, not the seller.

TDS is to be paid on the entire sale amount as mentioned in sales deed. 

In your case, he would required to deduct tds on Rs 52 lakh.