Circle rate of property exceed 105% of consideration received
20-May-2023 (In Tax Law)
Sir, As per 3rd Proviso to Sec.50 C, Income Tax Act,1961 ---"Provided also that where the value adopted or assessed or assessable by the stamp valuation authority does not exceed one hundred and five per cent of the consideration received or accruing as a result of the transfer, the consideration so received or accruing as a result of the transfer shall, for the purposes of section 48, be deemed to be the full value of the consideration." Query- If circle rate of property exceeds 105 % of Consideration received , then which rate will be Full Value Consideration. pLS TELL??? 2) Also, pls explain this proviso as I can;t understand it? Thanks..
As per Section 50C if a property is sold below the Circle Rate, the circle rate of the property would be deemed to be the rate at which property has been sold and capital gains tax would be levied assuming that the property has been sold at the Circle Rate.
Irrespective of the consideration for which the property has been sold, if it has been sold for a price below the Circle Rate, the circle rate would be assumed to be the Sale Price and Capital Gains Tax would be levied.
You can also appeal to the sub-registrar regarding this.
But if consideration will be more than 105% then the amount excess of it would be added into your income.
THANK YOU
Irrespective of the consideration for which the property has been sold, if it has been sold for a price below the Circle Rate, the circle rate would be assumed to be the Sale Price and Capital Gains Tax would be levied.
You can also appeal to the sub-registrar regarding this.
But if consideration will be more than 105% then the amount excess of it would be added into your income.
THANK YOU
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Dear Sir/Madam,
As per The Income Tax Act 1961 Provision - In this case the property value consideration Will be assessable according to the circle rates .
Thankyou
Regards
Adv Himanshu Singhal
As per The Income Tax Act 1961 Provision - In this case the property value consideration Will be assessable according to the circle rates .
Thankyou
Regards
Adv Himanshu Singhal
This proviso has been added to the Income Tax Act 1961 by the Finance Act 2018 (budget 2018) and shall be applicable from Assessment Year 2019-20.
UNDERSTANDING THE SECTION
We shall first understand the section via an example. A sells a Property for a Consideration of Rs. 100 and the value assessed by the authority is Rs 105 in this case the full value of consideration will remain Rs. 100.
Earlier, before the introduction of this proviso, the full value of consideration would have been Rs. 105, as assessed by the stamp valuation authority, as it is more than the consideration for which A has sold the property for.
This Proviso has been introduced because of the practical hardship faced by people because a difference of 5 percent in actual consideration and assessed value by the authority is a very menial variation. It is generally pointed out that this variation can occur in respect of similar properties in the same area because of a variety of factors, including shape of the plot or location. In order to minimize hardship in case of genuine transactions in the real estate sector, it is proposed to provide that no adjustments shall be made in a case where the variation between stamp duty value and the sale consideration is not more than five percent of the sale consideration.
Hence in such cases for the purposes of section 48 the consideration actually received shall be taken as full value of consideration and not what is assessed by the authority.
UNDERSTANDING THE SECTION
We shall first understand the section via an example. A sells a Property for a Consideration of Rs. 100 and the value assessed by the authority is Rs 105 in this case the full value of consideration will remain Rs. 100.
Earlier, before the introduction of this proviso, the full value of consideration would have been Rs. 105, as assessed by the stamp valuation authority, as it is more than the consideration for which A has sold the property for.
This Proviso has been introduced because of the practical hardship faced by people because a difference of 5 percent in actual consideration and assessed value by the authority is a very menial variation. It is generally pointed out that this variation can occur in respect of similar properties in the same area because of a variety of factors, including shape of the plot or location. In order to minimize hardship in case of genuine transactions in the real estate sector, it is proposed to provide that no adjustments shall be made in a case where the variation between stamp duty value and the sale consideration is not more than five percent of the sale consideration.
Hence in such cases for the purposes of section 48 the consideration actually received shall be taken as full value of consideration and not what is assessed by the authority.
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