Purchase of property - purchase price lower than circle rate

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If you're purchasing a residential property in Haryana for a price significantly lower than the circle rate (more than 10% difference), you may face additional income tax liability on the difference. This difference is typically treated as 'other income' and taxed at your normal slab rate. While a 10% variance is generally acceptable, exceeding this threshold could trigger tax demands, and tax authorities may seek a valuer's report to determine the property's true value.

abhimanyu

abhimanyu (Querist)
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18 March 2022 One of my close known to proposes to purchase a residential property In Haryana the sale price of which is around 15% LESS THAN the CIRCLE RATE of that property . To put it differently, , the Sale Price of the residential property is appx. Rs. 20 lakh LESS THAN THE CIRCLE RATE OF THAT PROPERTY.

KINDLY GUIDE TAKING INTO ACCOUNT EXISTING APPLICABLE LAW AND PROVISIONS OF INCOME TAX

1. WHETHER THERE WILL BE ANY ADDITIONAL LIABILITY OF INCOME TAX ON THE BUYER OF THE PROPERTY;

2. IF ANSWER TO THE ABOVE IS IN AFFIRMATIVE, HOW MUCH WILL BE THE LABILITY AND WHETHER THERE IS ANY WAY TO AVOID THAT LIABILITY.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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19 March 2022 1 yes, tax payable on the difference amount considering it as other income.
2 Normal slab rate applicable. AO can seek valuer's valuation.

abhimanyu

abhimanyu (Querist)
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20 March 2022 seetharaman sir,

I have been told that difference between the circle rate and sale value upto 10% is allowed and not treated as income. Kindly guide

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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21 March 2022 Yes you are right upto 10% it's allowed.

abhimanyu

abhimanyu (Querist)
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21 March 2022 sir,

will valuation report of the property would be required and if so who are such valuers????

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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21 March 2022 AO will have the list and appoint.

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