Capital gain

This query is : Resolved

PRATIKSHA (Querist)
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04 August 2016 During 1998-1999 we sold plot but registry was not done A bond was given to Buyer but now buyer wants the registry to be done. I want to ask whether now any capital gain tax will be attracted? what if the value of property sold reflected in bond is less than government valuation

CA CMA CS Ram Pavan Kumar Melam

CA CMA CS Ram Pavan Kumar Melam (Expert)
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04 August 2016 As there is no record of transfer in 1998-98 and you are registering the capital asset during FY2016-17. The transfer as per the provisions of Income Tax will be taken place during FY2016-17.

You are going to record the market value in 1998-99 as consideration now. You may record the same in the sale deed, if there is any proof of possession by the Vendee in 1998-98 i.e. changing electricity bill, local authority tax. etc. in his name. You quote such references also in the recital part of sale deed.

However, quoting lower consideration than market value, is risky and attracts the provisions of section 50C (stamp value as consideration for capital gains computation) and section 56 (other income) in the hands vendee for paying lower consideration than stamp value.

Moreover, you would not returned capital gains in 1998-99.