FCS Deepak Pratap Singh
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INCOME TAX QUESTIONS ANSWERS SERIES XXX Sections Involved: 43CA, 50C 56(2)(x) of Income Tax Act, 1961. Sale /Transfer of land or building on consideration less than Stamp Duty Value. QUESTION: Mr. Hari, a property dealer, sold a building in the course of his business to his friend,Mr. Rajesh
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FAQ :
Stamp Duty Value (SDV) is the value adopted or assessed by a State Government authority for the purpose of calculating stamp duty on a property transfer.
Section 43CA applies to the seller of a property (land or building) when the sale consideration is less than the SDV. In such cases, the SDV is deemed the full consideration for calculating profits and gains, unless the SDV does not exceed 110% of the consideration received.
Section 56(2)(x) applies to the buyer of immovable property. If they receive property for a consideration less than its SDV by more than Rs. 50,000, or if the SDV exceeds 10% of the consideration (whichever is higher), the difference is taxed as 'income from other sources'.
Section 50C applies when a capital asset, like land or a building, is transferred for less than its SDV. Similar to Section 43CA, the SDV is deemed the full consideration, but Section 50C specifically deals with capital assets, whereas Section 43CA can apply to business assets as well.
If any part of the sale consideration is received on or before the agreement date via approved electronic modes (like RTGS, NEFT, etc.), the SDV on the agreement date can be considered instead of the SDV on the transfer date. Payments via crossed cheque on the agreement date do not qualify for this benefit.
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