income tax return
This query is : Resolved
22 August 2009
my friend has purchse a building of rs 200000. amount in stamp paper value display rs 200000.
but actual registed at rs 325000.
What amount will be show in income tax balance sheet
but actual registed at rs 325000.
What amount will be show in income tax balance sheet
22 August 2009
I didn't get ur question, if stamp paper value is 2 lakh then how can it be registerd at Rs 325000. The property is regstd with registrar by the amt of circle rate (stamp value).
Please clarify
Please clarify
31 July 2024
In income tax return filing, the value at which a property is recorded in the books of accounts is crucial for calculating depreciation, capital gains, and other related aspects. Here's how to handle the scenario you've described:
### **1. Amount to Show in the Balance Sheet**
- **Registered Value:** The property should be recorded in the balance sheet at the actual cost incurred to acquire it. This includes the cost of purchase plus any additional costs associated with the acquisition, such as registration fees.
- **In Your Case:**
- **Stamp Paper Value:** ₹2,00,000
- **Registered Value:** ₹3,25,000
You should record the property in the books of accounts at the **registered value**, i.e., ₹3,25,000. This is because the registered value reflects the actual cost incurred, which includes the agreed purchase price and other costs.
### **2. Income Tax Return Implications**
- **Depreciation:** For business or professional use, the property’s value recorded in the balance sheet (₹3,25,000) will be used to calculate depreciation. The Income Tax Act allows depreciation on the actual cost of the asset.
- **Capital Gains:** If the property is sold in the future, the capital gains will be calculated based on the recorded cost (₹3,25,000) and the sale price.
### **3. Reporting in the Income Tax Return**
- **Schedule AL (Assets and Liabilities):** When filing the income tax return, you need to disclose the property’s value under the assets section. This value should be ₹3,25,000 in your case.
- **Auditor’s Report (if applicable):** If you are required to file a tax audit report, the property value should be reflected as ₹3,25,000 in the balance sheet.
### **Why Registered Value Matters**
1. **Accurate Financial Reporting:** Recording the property at the registered value ensures that your financial statements accurately reflect the cost of acquiring the asset.
2. **Compliance:** This approach aligns with the accounting principle of recognizing assets at their actual acquisition cost.
3. **Future Tax Implications:** Using the correct value helps in calculating depreciation and capital gains correctly.
### **Additional Considerations**
- **Documentation:** Keep all documentation related to the acquisition, including the sale deed, registration documents, and proof of payment, as these will support the value recorded in your accounts.
- **Consult a Professional:** If there are any doubts or complexities, consult with a tax professional or accountant to ensure compliance with applicable laws and accurate reporting.
In summary, the property should be recorded in the balance sheet at the registered value of ₹3,25,000 for accurate accounting and tax reporting.
### **1. Amount to Show in the Balance Sheet**
- **Registered Value:** The property should be recorded in the balance sheet at the actual cost incurred to acquire it. This includes the cost of purchase plus any additional costs associated with the acquisition, such as registration fees.
- **In Your Case:**
- **Stamp Paper Value:** ₹2,00,000
- **Registered Value:** ₹3,25,000
You should record the property in the books of accounts at the **registered value**, i.e., ₹3,25,000. This is because the registered value reflects the actual cost incurred, which includes the agreed purchase price and other costs.
### **2. Income Tax Return Implications**
- **Depreciation:** For business or professional use, the property’s value recorded in the balance sheet (₹3,25,000) will be used to calculate depreciation. The Income Tax Act allows depreciation on the actual cost of the asset.
- **Capital Gains:** If the property is sold in the future, the capital gains will be calculated based on the recorded cost (₹3,25,000) and the sale price.
### **3. Reporting in the Income Tax Return**
- **Schedule AL (Assets and Liabilities):** When filing the income tax return, you need to disclose the property’s value under the assets section. This value should be ₹3,25,000 in your case.
- **Auditor’s Report (if applicable):** If you are required to file a tax audit report, the property value should be reflected as ₹3,25,000 in the balance sheet.
### **Why Registered Value Matters**
1. **Accurate Financial Reporting:** Recording the property at the registered value ensures that your financial statements accurately reflect the cost of acquiring the asset.
2. **Compliance:** This approach aligns with the accounting principle of recognizing assets at their actual acquisition cost.
3. **Future Tax Implications:** Using the correct value helps in calculating depreciation and capital gains correctly.
### **Additional Considerations**
- **Documentation:** Keep all documentation related to the acquisition, including the sale deed, registration documents, and proof of payment, as these will support the value recorded in your accounts.
- **Consult a Professional:** If there are any doubts or complexities, consult with a tax professional or accountant to ensure compliance with applicable laws and accurate reporting.
In summary, the property should be recorded in the balance sheet at the registered value of ₹3,25,000 for accurate accounting and tax reporting.
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