Circle rate higher then market rate of old flat

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d
227 Points Posted on 12 January 2021

Dear All,

A client has a old flat bought in 1988 and is selling it now for 50 Lacs, but the circle rate is showing the value of the flat as 75 Lac.

how to proceed with the sale of the said flat without income tax questioning the transaction, as i understand only 5% difference between circle rate and sale price is allowed?

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On 12 January 2021 at 15:24 Report
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Quick Summary
This discussion addresses a common issue where the circle rate of an old flat is significantly higher than its market sale price. It explores how to proceed with the sale without attracting income tax scrutiny, clarifying the allowable difference between circle and sale rates (currently 10% due to Covid). The advice clarifies that the circle rate often prevails for tax calculations for both buyer and seller, and the buyer may incur additional tax on the difference between the circle rate and the actual sale price.

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nil
35 Points Posted on 12 January 2021
I think it has been increased to 10%. Further if the circle value is inflated, we can proceed with the actual receipt and challenge the valuation later in if scrutiny falls
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On 12 January 2021 at 15:37
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Tax consultant
5895 Points Posted on 12 January 2021
Yes as per the new rule circles rate and sale rate different will be 5% then allowable
if not then capital gain calculation will be done taking circular rate not as per sold rate
and The buyer has to pay stamp duty on registration value which cannot be lower buyers the circle rate besides that buyer also pay tax on the difference of amount that is circle rate minus market rate under section 56(2) of income tax act as it considers as a profile to a buyer profit
as per the budget of 2018
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On 12 January 2021 at 17:09
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17269 Points Posted on 12 January 2021
Circle rate will prevail and tax calculated accordingly for buyer and seller. This year I think from a buffer rate of 5% , it is 10% in view of Covid.
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On 12 January 2021 at 17:34

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