Registration Valuation
This query is : Resolved
09 May 2021
At the time of registering a property, the valuation for the purpose of stamp duty is found to be higher than transaction value.
Will the additional valuation be treated as deemed income in the hands of seller?
What is the relevant income tax provision?
Will the additional valuation be treated as deemed income in the hands of seller?
What is the relevant income tax provision?
09 May 2021
Yes, if such difference is >20% (up to 30th June 2021), the stamp duty value would be the sale consideration for the transferer. The difference would also be taxed in the hands of the transferee under IFOS. Refer to section 50C and 56(2)(x) for more details.
09 May 2021
Section 50c.
In case sale consideration received or claimed to be received by seller on sale of land or building or both is less than value adopted by stamp valuation authority, such value adopted by SVA would become actual sale consideration received or accruing to the seller. Therefore, capital gain would be Valuation as per stamp valuation authority reduced by cost/indexed cost of acquisition.
However, Budget 2018 has brought about an amendment in section 50C whereby no adjustments shall be made in a case where the variation between stamp duty value and the sale consideration is not more than five percent of the sale.
In case sale consideration received or claimed to be received by seller on sale of land or building or both is less than value adopted by stamp valuation authority, such value adopted by SVA would become actual sale consideration received or accruing to the seller. Therefore, capital gain would be Valuation as per stamp valuation authority reduced by cost/indexed cost of acquisition.
However, Budget 2018 has brought about an amendment in section 50C whereby no adjustments shall be made in a case where the variation between stamp duty value and the sale consideration is not more than five percent of the sale.
09 May 2021
Thank You CMA Poornima and CA R Shreedharan! Appreciate the prompt response!
09 May 2021
5% limit was revised to 10% as per Finance Act 2020. Also 20% limit is applicable only in case of section 43CA (not 50C). Correct me if this is not right.
10 May 2021
Thank You! Does the buyer have any implication!
10 May 2021
If the difference is >10%, (SDV - consideration) would be taxed in the hands of the buyer under income from other sources.
10 May 2021
Thank You! So both buyer and seller effectively get ta xd!
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