Go AD-Free with CAclubindia Pro and get a FREE CCI Coffee Mug. Subscribe Now!

Potential LTCG issues when selling property below Fair market Value

24 July 2022

Hi,

I have a plot of land purchased long back for which the current registration value (Fair Market Value) is 20 Lakhs. But as I haven no buyers for it at even the FMV so I am making a distress sale for Rs. 10 Lakhs.

I understand that since the registration will happen at 20 Lakhs and stamp duty will also be paid at that price, I will have to pay LTCG also at the rate of 20 Lakhs and I am ok with it. But since I will be receiving only 10 Lakhs to my account, will the IT dept deem that the remaining 10 Lakhs was received as cash and hence penalize me for it ? How can I avoid this situation ?

Regards,

Sanjay

Reply
Follow
Share

2 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (184706 Points)
Replied 25 July 2022

First they will scrutinize buyer and check if any cash was withdrawn from their bank accounts.

If yes, you will be also in scrutiny..... otherwise not much harassment...

2 Like

Upgrade to CAclubindia Pro. Subscribe Now!

CA PARTH SHAH (In Practice) (1951 Points)
Replied 26 November 2022

No need to do registry of 20 Lakhs. Yo ucan sell at Rs 10 lakhs. However in ITR, you will have to disclose that the registry value of the plot is Rs 20 lkahs and pay capital gains as per Rs 20 Lakhs only.

2 Like