Stamp duty n capital gain

Save Share

This query is : Resolved

sharad goyal (Querist)

24 August 2014 I am promotor as well as director of the same pvt ltd co registered in mumbai. I have bought commercial office in mumbai though bank loan and my own fund. I wantto give that commerical property to co and I will take shares of my unlisted pvt ltdco. I want to co has to pay stamp duty to create its ownership or not as I am the promotor of the co. If yes how much %. Second any capital gain I have to pay. I m giving property at book value in same financial year. My consideration is shares of my own co not listed also. Awaiting your reply.
Rgs

sharad goyal

sharad goyal (Querist)

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)

25 July 2025 You're essentially transferring a commercial property (held in your individual name) to a **Private Limited Company** (of which you're both promoter and director), **in exchange for shares**. This raises **two key issues**: **Stamp Duty** and **Capital Gains Tax**.

---

## ✅ 1. **Stamp Duty in Maharashtra (Mumbai)**

Yes, **stamp duty is payable** on such a transfer — even if it's between you and your own company — because it involves a **transfer of immovable property** to a separate legal entity.

### 🔹 Applicable Rate in Mumbai:

* For **commercial property**: Stamp duty is **5%** (as of latest Maharashtra rates)
* Add **1% registration fee** (subject to a cap of ₹30,000)
* If within municipal limits, surcharge or metro cess may also apply (e.g., 1%)

👉 So, **effective duty may be around 6%** on the **market value or consideration amount**, whichever is **higher**.

📝 Even if you transfer at book value, the **Ready Reckoner value (Circle Rate)** will apply for stamp duty calculation.

---

## ✅ 2. **Capital Gains Tax (Income Tax Act)**

### 💡 You're giving the property in exchange for shares — this is a **transfer** under **Section 2(47)** of the Income Tax Act.

However, the computation of **capital gain** depends on the fair market value of shares received and whether exemption applies.

### 🚫 No automatic exemption:

Since shares received are from a **private company**, **Section 47** does **not** exempt this transaction.

**Key Points**:

* **Consideration**: Fair market value (FMV) of shares received will be considered for capital gains calculation (not necessarily book value).
* **Capital Gain = FMV of shares received - Indexed cost of acquisition of property**
* If held for more than 24 months → Long-Term Capital Gain (LTCG), else Short-Term

### 🔸 Reporting:

This must be reported in your **Income Tax Return**, and capital gains tax (LTCG @ 20% with indexation, or STCG @ applicable slab) would apply.

---

## ⚖️ Summary:

| Aspect | Details |
| --------------------- | ------------------------------------------------------------------------ |
| **Stamp Duty** | \~6% in Mumbai on property value or circle rate (whichever is higher) |
| **Who pays** | The company (as buyer) |
| **Capital Gains Tax** | Yes, applies on transfer to company; shares are treated as consideration |
| **Exemption** | Not available under Section 47 for transfer to own Pvt Ltd Co |
| **FMV of shares** | Must be considered while computing capital gain |

---

## 🔍 Recommendation:

* Get a **valuation report** for fair market value of shares.
* Consider executing a **proper sale deed or transfer agreement** to avoid future litigation.
* Consult both a **chartered accountant** and a **stamp duty consultant** in Mumbai for accurate execution.

Would you like help with a sample calculation for capital gains or draft deed structure for this transfer?

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