Capital gain tax on residential land

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Querist : Anonymous

Querist : Anonymous (Querist)

02 January 2015 What's the amount to be taken for capital gain purposes, where sale consideration received is higher than registered sale deed in case land is sold? the said land is held for more than 3 years (eg: sale consideration received is Rs 10Laks and registered sale deed for stamp duty purpose is Rs 8 Laks).

What's the value available for capital gain exemption under Sec 54F?

from the proceeds, if land is acquired and a building is constructed, is the exemption based on registered value or consideration paid under Sec 54F? (eg: registered value of new land is Rs 3 Laks, sale consideration paid for land is Rs 7 Laks & 3 Laks is cost for constructing building, is the exemption for Rs 6 Laks or Rs 10 Laks).

what proofs should be maintained as cost for constructing of building, since most expenditure will be in cash? if in above example cost of land was Rs 10 laks and and loan is taken for construction of building, can exemption be claimed on entire cost of land - Rs 10 laks.

are there any restrictions on building (eg: number of living units/floors that can be constructed) if the entire building is registered as one unit (eg: can 5 - 2bedroom units be constructed on single plot of land and the entire property be claimed for capital gain exemption)

Amol S Joglekar

Amol S Joglekar (Expert)
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02 January 2015 Higher of the two.
Take 10L for capital gain working
Under 54F, the amount paid is 7L and construction 3L....10L qualifies for 54F, subject to however other conditions set in that section

Querist : Anonymous

Querist : Anonymous (Querist)

02 January 2015 Thank you very much. it would help, if you could give ur expert view on below also (part of my query)

if in above example cost of land was Rs 10 laks and and loan is taken for construction of building, can exemption be claimed on entire cost of land - Rs 10 laks.

are there any restrictions on building (eg: number of living units/floors that can be constructed) if the entire building is registered as one unit (eg: can 5 - 2bedroom units be constructed on single plot of land and the entire property be claimed for capital gain exemption)

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Amol S Joglekar

Amol S Joglekar (Expert)
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02 January 2015 54F is bit conservative than 54.
Whereas in 54 plurality of house is sanctioned by many courts, so far as 54F is concerned the conditions of owning A HOUSE is very strictly observed. Subject to that...there is no any restriction of square feetage of the house...)

And one more simple point, try to bear....
Never say only land is purchased...Always say a house is construted out of sale consideration of the capital asset, the balance if any was met out of loan...

Querist : Anonymous

Querist : Anonymous (Querist)

02 January 2015 thank you Amol. by the strict provision of sec 54F, would your advice be that even with one registered khata for 1 building with multiple floor (like one building with 2 floors with 2 units on each floor), exemption would be limited to pro-rata land and sq-feet of one unit only. seeking clarity here.

Amol S Joglekar

Amol S Joglekar (Expert)
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02 January 2015 Just in a lighter sense....
Mr Mukesh Ambani's house is 27 storied, having parkings, guest rooms, seminar hall, hellipad and what not...It is one unit....
Same way...in your case let it be any number of units....the property should be ONE and owned by the one who has made the capital gain. That's all

See is it like that? Capital gain is 10lakh and cost of new asset is 1 crore..

you can claim the exemption u/s 54F.

Anything else? Please ask.

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Querist : Anonymous

Querist : Anonymous (Querist)

02 January 2015 Thank you very much Amol.

Amol S Joglekar

Amol S Joglekar (Expert)
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02 January 2015 You are most welcome.....

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VIKAS KUNDU

VIKAS KUNDU (Expert)
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17 January 2015 Dear sir,
How can we prove that we have purchased that in 7 lakhs when there is registry is of Rs. of 3 lakhs.

Amol S Joglekar

Amol S Joglekar (Expert)
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19 January 2015 Sorry, Not clear with your query....Can you please elaborate?

Querist : Anonymous

Querist : Anonymous (Querist)

19 January 2015 in above example where higher sale consideration is received or purchase consideration is paid in cheque & there is an unregistered document as proof, however the registered government document is of lower value to save on stamp duty, would the ITO rely on the unregistered document & bank statement instead of registered document as per stamp act? please help clarify.

Amol S Joglekar

Amol S Joglekar (Expert)
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19 January 2015 why all of a sudden this point of UNREGISTERED deed has crept in?

Registration is must in case of all registerable transactions....

Unregistered deed per se carries no value. The Assessing Officer may not agree to that.

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