Long term capital gain on sale of house property

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ABHIJIT JOSHI

Senior Manager

36 Points Joined August 2011

Hi,

I am selling my flat @ 90 lakhs but to save stamp duty & registration cost buyer wants to do the registration on ready recknor price (minimum price for registration) which is 61 lakhs. He is ready to pay the balance amount by way of cheque or trf. So I suggested him to add clause in agreement that if buyer do not complete the transaction on or before particular date (which he will not) he will pay me compensation of Rs 29 lakhs(90 -61)

My question is whether this 29 lakhs will be considered as sales consideration for calculating Long term Capital gain so that total sale price of of property will become 90 lakhs. If not & if this 29 lakhs will be considered in other source of income then I will end up with paying huge tax.

I am currently in 30 % bracket. My property cost after indexation is coming near about 91 lakhs ( cost as per agreement + stamp duty & Reg charges+ service tax & VAT + interest on borrwed capital which I have not claimed till date)

Please guide me on this. Looking for your expert advice

Regards

Abhijit Joshi

Replies (4)

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

210838 Points Joined July 2016

For your case it is advisable to pay additional stamp duty rather than pay huge income tax.

Otherwise also you don't require to pay LTCG tax, that part you will loose by registration at lower end.

Mudit Agarwal

73 Points Joined June 2017

You will not get any benefits of rest 29 lac under ltcg on sale on property as this will count your other sources income as this amount taken by cheque or by cash. If you shown this income from other sources then you have to pay additional tax on this amount. So it is good to pay some additional duty and get benifit of LTCG.

ABHIJIT JOSHI

Senior Manager

36 Points Joined August 2011

Hi Sir,

If I understood it correctly you mean to say that difference of 29 Lakhs will not be considred in LTCG though it is generated from sale of capital asset.

Regards

Abhijit