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Property sold lesser than stamp duty value - Tax implication
27-May-2023 (In Property Law)
I am selling a land at Rs. 1.2 cr for which agreement has already been signed by both parties. Now suddenly the State Government has increased the Guideline value to Rs. 1.8 cr . nIn fact the market value is not that much in this area. In this circumstances it feels very bad to pay tax on income that never came to your hand. The buyer is ready to pay Stamp duty and register on 1.8 cr.n1 What to do in the above circumstances. Should I pay Capital gain tax(after indexation of course) for money n
The capital gains tax situation in your case might be a bit complicated. In India, the calculation of capital gains tax is based on the difference between the sale price and the cost of acquisition. If the guideline value of the land has increased to Rs. 1.8 cr, but you are selling it for Rs. 1.2 cr, then there could be a potential tax implication for both you and the buyer.
For you, the capital gains would be calculated based on the sale price (Rs. 1.2 cr) minus the cost of acquisition, not on the guideline value. However, since the guideline value is now Rs. 1.8 cr, the buyer might have to pay stamp duty based on this higher value.
There are a few potential ways to address this situation:
You could potentially renegotiate the sale price with the buyer to account for the increased guideline value. However, this may not be feasible if the market value of the land is not that high.
You could consult with a tax advisor to see if there are any potential tax planning strategies you could use to minimize your capital gains tax liability.
You could consider challenging the increased guideline value with the appropriate authorities, though this could potentially be a time-consuming and complex process.
For you, the capital gains would be calculated based on the sale price (Rs. 1.2 cr) minus the cost of acquisition, not on the guideline value. However, since the guideline value is now Rs. 1.8 cr, the buyer might have to pay stamp duty based on this higher value.
There are a few potential ways to address this situation:
You could potentially renegotiate the sale price with the buyer to account for the increased guideline value. However, this may not be feasible if the market value of the land is not that high.
You could consult with a tax advisor to see if there are any potential tax planning strategies you could use to minimize your capital gains tax liability.
You could consider challenging the increased guideline value with the appropriate authorities, though this could potentially be a time-consuming and complex process.
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