Sale consideration is less than stamp duty value

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manjiri (Querist)
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09 June 2016 I purchased a flat in 2014. The builder gave me a discount on the flat rate.

I got a letter from Income tax dept saying there is a difference of rs 2.52000 in the sale consideration and stamp duty value

Please advise.

Rohan Pandey

Rohan Pandey (Expert)
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09 June 2016 In accordance to Section 50C of the Act, whenever a property is sold below the circle rate, the value of such property is assessed at the circle rate i.e. stamp duty value rate. However, the provisions of Section 50C is not applicable in case of a buyer.

In the instant case applicability of section 56(2)(vii) will arise wherein the difference between the value of property and circle rate value would be assessed under the head "Income from other sources" in the hands of the purchaser.

However, if the purchaser can conclusively substantiate that the value of property is correct, the same can be considered by the tax authorities.

manjiri

manjiri (Querist)
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09 June 2016 Thankq for the prompt reply......please correct me if I am wrong..

does that mean I have to show the difference amount in other income section or do I need to get a letter from the builder to justify why the property was sold at a discounted rate?

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Rohan Pandey

Rohan Pandey (Expert)
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09 June 2016 You need to show the difference amount under "Income from other sources", any further clarification shall be made by the seller during his/her assessment.

manjiri

manjiri (Querist)
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09 June 2016 So if I show the difference in my income tax under "Income from other sources", I will have to pay the tax.

Rohan Pandey

Rohan Pandey (Expert)
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09 June 2016 As per the Act, the "real income" of a person is brought to tax. However, considering the last line my initial response, if you can conclusively prove to the tax authorities that what you have paid is actually the price required to be paid, then there shall be no tax liability in your case. Please consider the intent of section i.e. to curb circulation of black money in the market.

manjiri

manjiri (Querist)
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09 June 2016 GOVERNING STATUTE: This Agreement shall always be subject to the provisions of the Ownership Flats Act 1963, as amended from time to time and the rules made there under. The provisions of the Maharashtra Apartment Ownership Act 1970 or Maharashtra Co-op. Societies Act 1960 or Companies Act 1956 and Rules made there under from time to time as the case may be. The SAID FLAT / UNIT NO.xxx, on Eighth Floor admeasuring carpet 407 sq. ft. i.e. 37.81 Sq. mtrs and attached terrace admeasuring carpet 58 sq. ft. i.e. 5.38 sq. mtrs, At “building name” building No. “C” is situated in the area known as place name Tal. Haveli District Pune. The market value of the SAID UNIT computes at Rs.33,98,740/- @ Rs.57,590/- per sq. mtrs. As per Govt. valuation list. However, the PURCHASERS have agreed to pay total price or consideration of Rs. 31,46,000/-which is lower / higher than the market value. The PURCHASERS, therefore, have paid stamp on market value of Rs. 2,04,000/- as per Article 25-D of Bombay Stamp Act, 1958. The PURCHASERS have incurred and borne and shall incur and bear all necessary expenses, viz., stamp duty, registration fees and out of pocket expenses etc. The Purchaser/s declares hereby that he/she/ they has/have read and fully understood and agreed to the contents of this agreements and thereafter the same has been executed by the Purchaser/s.
I got a letter from Income tax department saying the following:

stamp duty value:3398740 and consideration value:3146000.00

There is a difference of Rs 252740.

there was no black money given...all payments are through cheque.

Please advise I am taxable for 252740?