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Stamp Charges

Arunashree ( Finance Manager) (117 Points)

06 February 2010

Hi,

iam having a doubt, Pl clarify as early as possibly.

Suppose a person sells a property (as per agreement between purchaser & seller,seller has to bear the stamp/registration chatges ) for Rs.3 crores inclusive of Rs. 30 lacs as stamp charges.Just tell me what will be the sale consideration & whether stamp charges born by the seller, can be treated as an allowable expenditure as per Income Tax act?

Clarify whether Sale Consideration will be 3 crores or 2.70 crores(i.e excluding stamp charges)

with regards

wani

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6 Replies

Amir (Learner) (4016 Points)
Replied 06 February 2010

Dear Wanishree,

Stamp charges paid by seller will be allowed as deduction as follows-

1) if capital asset - "as expenses on transfer"

2) if business asset - a) if WDV Becomes nil or negative or entire block is transfered (i:e computation is made u/s 50) - "as expenses on tranfer"

b) if wdv is + & there r assets in the block - "business expenditure u/s 37(1) subject to sec 43 Bon payment basis.

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C.Balaji (Learner) (1867 Points)
Replied 06 February 2010

Dear Wanishree,

Stamp charges paid by seller will be allowed as deduction

i.e. expenses on transfer...Selling expenses/legal expenses....

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Arunashree ( Finance Manager) (117 Points)
Replied 06 February 2010

Thanq but pl tell me what will be the sale consideration.Is this correct calculation:

Sale Consideration -3,00,00,000

Less:Stamp/registration charges - 30,00,000

Balance =2,70,00,000

CA. Ashok shah (CHARTERED ACCOUNTANT) (333 Points)
Replied 06 February 2010

Yes, it is correct. Refer Sec.48. From the balance u have to deduct Indexed Cost of acquisition /improvement in case of Long Term capital assets otherwise only Cost of acqisition/improvement to find out Capital Gain.

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