Save Rs 588 on a 2-Year Ad-Free CAclubindia Pro Membership. Subscribe Now!

Payment exceeding rs.20000/- in respect of purchase of plot

Save Share

Join Us Follow Us Add as Source

This query is : Resolved

Report Query Ask a Query

Querist : Anonymous

Querist : Anonymous (Querist)

28 December 2012 I have recently purchased a plot and on agreement date paid a sum of Rs.60,000/- in cash to the seller. Whether the same will be order according of Income Tax Laws

Sanket

Sanket (Expert)

30 December 2012 In view of the provisions of the INCOME TAX ACT,1961, any payment above RS.20000 will be disallowed at a flat rate of 20% of entire amount and not the excess amount over 20000.(i.e.if land is purchased for Rs.100000,the disallowace would be 100000*20%=20000 and not (100000-20000)*20%. accordingly the value of land will be taken at a low figure for income tax purposes against which less depreciation shall be allowed, thereby increasing your profits and ultimately taxes.SINCE LAND IS TAKEN AS A NON DEPRECIABLE ASSET FOR INCOME TAX PURPOSES,YOU MAY NOT BE AT A LOSS.HOWEVER, in order to be at a safer side & avoid various legal consequences, payment above Rs.20000 should be made through cheques only.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now