Best way to make payment for property

Others 727 views 3 replies

A.Chandrakishore

Searcing for job

30 Points Joined March 2009

Hi All,

I have a question with reqard to the payment to be made for purchase of a house property.

I am planning to buy a property worth 46 lacs, for which 20 lacs would be funded by my father in order to save Capital gains tax as he sold his flat and had Capital gains of 14 lacs. For the remaining amount of 26 lacs i would be going for a home loan.

Now everyone knows that for registeration purpose normally the value of property is shown much less than the market value and closer to municipal value. I had initially planned for showing property in sale deed at 39 lacs so as to get the loan and also to save capital gains tax of my father.

The builder is however telling me to show it at 29 lacs and as payment he has asked me to pay 29 lacs in cheque and remaining amount in cash.

With regard to above please suggest me appropriate way to make the payment. I have the following questions.

1. Can i make the payment in cash and if yes upto what amount. I have all white money earned through proper sources and have been shown in the tax returns filed. Will there be any legal/tax implication for the payment made in cash.

2. What if i show the property at 39 lacs in sale deed. Is there any clause in the Income tax which says that if the property above 30 lacs is purchased that needs to be reported to the Income tax department. What would be the implications for that.

Thanks and Regards

Chandrakishore

Replies (3)

Guest

what ever the case maybe, you should show full value of the purchase. your hard earned white money will be black, and that's the plauge that eats the country... it maybe tempting to save few INR but think about future....

CA D.C. Bansal

Accounts Head

283 Points Joined November 2007

Please check that old property has been sold by the HUF/Farther and new property is being purchased by you, whether exemption will be available to you or not.

Further, in my opinion, section 54 of Income Tax does not require to use only proceeds received from old property in purchase of new house. Only condition is that you should have purchased a new house, purchase consideration of which should exceed the amount of capital gain.

Mihir

Wealth Manager

5293 Points Joined December 2008

In the home loan, the bank will make the payment directly to the seller by a banker's cheque. So how do you propose to make payment in cash when 26 lacs is in cheque(home loan) , and rest 20 lacs in cash?

20 lacs cash is a big amount. I don't think you should look at the seller's convenience. Look at your own comfort from viewpoint of taxation as well as handling so much cash. Not a great idea.