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Declaring income from sale of plot in IT returns

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RAGHUNATH

S/W Engineer

33 Points Posted on 03 March 2021

Hi,

I am planning to sell my plot. The buyer is willing to show only the Government Rate of the plot in the Sale deed and wants to pay the remaining amount (i.e., Market Rate minus Government Rate) by cash. He is doing this so as to save on the registration costs.

Can I ask the buyer to do online transfer of the remaining amount (instead of me accepting it by cash).? If so, can I declare only the Govt Rate (mentioned in Sale Deed) while filing IT returns.?

Or should I declare the full Market Rate in the IT returns (even though the Sale Deed mentions the Govt Rate value).?

In a few months, this whole money will be spent on the construction of a house on my another plot.

regards,
Raghunath

Replies (7)

Quick Summary

This discussion addresses how to declare income from selling a plot of land when the buyer wants to register the sale at the government rate and pay the difference in cash to save on registration costs. It clarifies that capital gains tax is applicable and explains the implications of declaring only the government rate versus the full market rate in IT returns. The advice suggests that amounts received via bank transfer must be shown as the sale value, and while cash payments can lead to a lower declared sale value, it's crucial to understand the tax implications and potential exemptions for reinvestment in property construction.

Rama chary Rachakonda

Master in Accounts & high court Advocate

9620 Points Posted on 03 March 2021

Tax on capital gain is applicable.sale amount minus purchased amount of flat as per document.Tax is exempted if you start construction within 6 months from sale of property.

sabyasachi mukherjee

Profession Business

28246 Points Posted on 03 March 2021

You hv to disclose your sale of plot in itr.

Spurto Consultancy Services

Consultant

1891 Points Posted on 03 March 2021

All the amount which you will receive via bank mode have to be shown as Sale value of plot of land.

Further the deed will also be of actual sale amount received via bank.

Further, if you will receive the remaining amount by cash mode then you can show lesser sale value.

sabyasachi mukherjee

Profession Business

28246 Points Posted on 03 March 2021

If the buyer wants to pay the amount of govt. rate via bank mode.
Rest thru cash.
If you want disclose the entire amount then it will be govt. rate plus differential market rate.
Now if the differential amount is less than 5%. You can reveal the entire amount in itr.