P Gupta (practice) (75 Points)
25 February 2009I took the possession of the society apartment in 2007 but registry was done in 2008.
Short/long term capital gain on property depends on if it is sold before or after 3 years period.
I would like to know if 3 year period is counted from date of possession or the date of registry.
CMA KNVV Sri Vidya - Sri Kanth
(C.A.Final (New) ICWAI FINAL (New))
(11269 Points)
Replied 25 February 2009
DAte of registration
Harish Arora
(Chartered Accountant)
(52 Points)
Replied 25 February 2009
No, it will be counted from the Date of Possession as per the Income Tax ACct 1961
P Gupta
(practice)
(75 Points)
Replied 25 February 2009
| Originally posted by :Harish | ||
| " | No, it will be counted from the Date of Possession as per the Income Tax ACct 1961 | " |
After some more search I agree with Harish that it will be counted from date of possession.
But need some more clarification. Is it that capital gains tax is only on the profit (gains) from the sale of the property and not on the sale price of the property. For example, if property is sold at same price as purchase/registered price then there is no capital gain tax (short or long).
Now, registered value of property in India is lot lower than the actual market value. Does the registered value change after every sale/purcahse? If yes, by how much %age? For example, if I sell my apartment can I sell at same registered/purchased value that I paid in the past? The extra amount is of course not white.
Please clarify this aspect.
Ashish M
(Chartered Accountant)
(2731 Points)
Replied 25 February 2009
Sec.50C provides that in case of sale of land or building, the cap gains shall be chargeable on the value determined by the stamp valuation authority if the registery price of the property is less than the value determined by the authority...............
it is beneficial to register the price as per circle rates because otherwise also, the stamp duty is to be paid on the prevailing circle rates and so do the cap gains tax...........
hence if registery price of the property is less than circle rates, then their will be two disadvantages...
(a) stamp duty and cap gains tax is to paid on the circle rates in any case and;
(b) for the person who buying it, the cost will be the same as the registery price, (i.e. less than circle rates).so in case he further sells it, he will be paying the additional tax on same amount ...
For exmple.........You sell property at Rs.10 lakhs when as per circle rates, value actually coming out to be Rs.50 lakhs. u hve to pay tax as per Rs.50 lakhs.as sale price.....(not Rs.10 lakh)........
further the person selling the property will be having cost Rs.10 lakh only so however that if he further sells the property, his cost deemed to be Rs.10 lakh (not Rs50 L)...hence he will be end up paying addtional tax on Rs.40 lakhs...on which u hve already paid tax..........
CA Sakshi
(CA Practice)
(309 Points)
Replied 26 February 2009
| Originally posted by :P Gupta | ||
| " | I took the possession of the society apartment in 2007 but registry was done in 2008. Short/long term capital gain on property depends on if it is sold before or after 3 years period. I would like to know if 3 year period is counted from date of possession or the date of registry. |
" |
You might have read about Transfer of Property Act- if not registered but possession taken or payment made or date decided for payment to be made its PART PERFORMANCE OF CONTRACT. and you will be deemed owner from the period of possession. Sec. 27 of IT Act define the concept of deemed ownership.
Deepak
(Auditor)
(22 Points)
Replied 28 February 2009
Dear All
it will be consider from date of possation becasue act explain Period of hoding not registry, we can look the case of conversion of capital assets in to stock in trade here it is treated as transfer, it not look the transfer in registry.
CAclubindia
