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How to save Tax for Builders

CA Priyank (Priyank Sanghavi & Co) (296 Points)

09 April 2011

Friends!!!!!!!

I want to know the TAX Planning for my client. Can you plz help me out from following details?

Fact of the Case:

1. He purchased a land for Rs. 50 lac.

2. He had construed a building on it with 10 flat.

3. Earlier he had assumption that each flat will be sold at Rs. 14.00 lac per flat as per registration amount, but now registration value has shoot up to Rs. 42.00 lac per flat which is equal to its real value.

4. So that his income will be Rs. 280.00 lac on paper. (Rs 100.00 lac for construction)

Can you plz guide me to reduce tax liability. Nature of firm is Partnership

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4 Replies

Pankaj Arora (Learner) (3134 Points)
Replied 09 April 2011

if purchase land is old more than 3 years than it will be LTCG and you can invest this in purchasing new land from your LTCG or you can invest in Bond but maximum up to 50Lacs in Bond.

Pankaj Arora (Learner) (3134 Points)
Replied 09 April 2011

You can decrease your registration value or you can show more expense for construction…

If land is more than 3 years old than you will get benefit of cost inflation index…

CA Priyank (Priyank Sanghavi & Co) (296 Points)
Replied 09 April 2011

My client is builder. It is a business for them. Registry value can't be decreased as it is the value under stamp act

CA Saiyum khan (Practicing CA) (685 Points)
Replied 09 April 2011

Originally posted by : CA Priyank
	My client is builder. It is a business for them. Registry value can't be decreased as it is the value under stamp act

Registrar can ask you for the stamp duty at the rate defined by the concerned state goverment. Actual deal can be lower than the rate prescribed by the government. You need to justify the transaction value to the ITO which is lower than the rate defined by the state government.