Krishna (na) (34 Points)
10 June 2010Hi,
One of my friends is looking to buy some property. The plot owner is seeking money paid through cheque only for the registration value and rest of the money in cash. Is this kind of transaction legally allowed? What are the tax implications of such a transaction?
Thanks in advance
krishna
Kalpesh Chauhan,
(Tax Assistant (Accounting Technician CA FINAL CS PROF. PROG. B.Com))
(8310 Points)
Replied 10 June 2010
In the absence of proof, practically most of the property transactions at present are done through this method only.
The question of tax implications never arise as because in the eyes of law the cash paid in excess of registration value never comes in view.
You should be aware of this. Do not worry.
And it should be beneficial for your friend as it will reduce the Stamp paper fees of your friend.
But as far as long term benefit is concerned Property should be registered with full price as it is agreed between the parties. It is so because the more the registration value of the property the more loan will be sanctioned by the bank in future.
With Regards,
Kalpesh
Krishna
(na)
(34 Points)
Replied 11 June 2010
Thanks Kalpesh.
I don't completely understand why tax implications never arise as such. If there is an audit by IT for the buyer, would not it is required to produce proof for each of the withdrawals made that are reasonably high from the buyers bank account. Wouldn't it lead the buyer into messy situation?
TIA,
krishna
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