I am selling my property. The buyer wants to do the sale deed based on the current guidance value of the peoperty and the delta amount is not shown on deed. I as a buyer want all the amount to be in bank transaction. What are the consequences for me as a seller for the delta amount and how should I pay the tax for delta amount, will delta amount still be considered as capital gain or comes as extra income (income tax slab). And TDS should be deducted on what amount(guidance value) or the actual aggreed upon sum(total value of the consideration) As a buyer, he wants to reduce on stamp duty costs and hence he is willing to stick to guidance value. What are the legal implications to him. Can he file a suite later that he has given more money than what is in sale deed as file a suite or other IT dept law for that amount back through court order. As a seller what precautions should I undertake. Should I insist on having the actual sale amount consideration to be stipulates in sale deed (increases his stamp duty and he might not abide by) What clauses should I, as a seller, include in sale deed to avoid future consequences for the delta amount.
It is not advisable to register sale deed with guidance value though actual value of sale consideration is more. At the time of scrutiny, capital gain would be calculated on total sale value received. You will be liable to pay additional tax, interest and penalty for misreporting of income
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Hey,
For the Seller:
Capital Gains Tax: In many countries, including India, the capital gains tax is applicable when you sell a property. The capital gain is typically calculated as the difference between the sale price and the purchase price of the property. If the sale deed shows a lower value than the actual sale price, tax authorities may consider the actual sale price for calculating capital gains tax.
Stamp Duty: The stamp duty is calculated based on the sale deed value or the guidance value, whichever is higher. If the sale deed value is lower than the guidance value, the tax authorities may assess the stamp duty based on the guidance value.
TDS (Tax Deducted at Source): In India, if the sale price is more than a specified limit, the buyer is required to deduct TDS at the time of payment to the seller. The TDS rate is usually 1% of the sale price. If the sale deed value is lower than the actual sale price, the TDS should still be calculated based on the actual sale price.
To avoid potential legal and tax issues, you should consider the following precautions:
Transparency: It's generally advisable to be transparent in property transactions and accurately reflect the actual sale price in the sale deed to avoid any legal consequences.
Include a Clause: If you still wish to proceed with the lower sale deed value, you can include a clause in the sale deed stating that both parties agree to this value for the purpose of stamp duty. However, this may not completely shield you from potential legal consequences if tax authorities decide to investigate further.
For the Buyer:
Stamp Duty: If the sale deed value is lower than the guidance value, the buyer may benefit from reduced stamp duty costs. However, this could also attract the attention of tax authorities.
Potential Legal Consequences: If the buyer knowingly enters into a sale deed with a lower value than the actual sale price and later decides to dispute this, they may face legal challenges. It's essential for both parties to be aware of the implications and potential risks associated with understating the property value in the sale deed.
In conclusion, while it may be tempting to understate the property value in the sale deed to reduce stamp duty costs, it's important to be aware of the potential legal and tax consequences for both the seller and the buyer.
I hope this answer is useful . For further query please feel free to ask . Or you can also opt phone consultation.
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Hello,
Selling a property based on the guidance value when the actual sale consideration is higher is not advisable. Misreporting the sale value can lead to additional tax liabilities, interest, and penalties for the seller. To avoid these issues:
For the buyer, choosing to declare a lower value to reduce stamp duty costs may limit their ability to claim a different value later, and disputes may arise if additional payments are made outside the sale deed.
Hope you find the information helpful. You are free to contact me for further discussion.If you could spare two minutes of your time to write a review, It would be really grateful and very happy to read it.
Thank you.
Shubham Goyal
