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House property sell/buy tax query

04 May 2021

Hello,

1. Do we have to pay any capital gain on selling one property which is self-occupied?

2. Can a buyer make sale agreement more than the actual sale value of property to just get more home loan amount from bank? Meaning on papers, basis the sale agreement, buyer is giving and seller is receiving for example "INR 10" amount. But in reality, buyer is only giving and seller is only receiving "INR 5" amount.

As a seller, what are the side effects of this because on papers, I am getting "INR 10", but in reality I got only "INR 5"?

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3 Replies

CA. Sourav Sarkar (Chartered Accountant ) (24578 Points)
Replied 04 May 2021

1. Yes, capital gains will arise.

2. This is not legal way it will create consequences. It will lead to income escaping which will lead to income tax escaping.

1 Like

Rameshwar Soni (3 Points)
Replied 04 May 2021

Thanks Sourav for the quick reply.

1. But as far as I understand, a person with one home and no other property should not have any capital tax, correct? Capital tax comes into picture when I have more than 1 home/property and tries to sell one of them. Here I have only 1 home in which stay and wants to sell the same. Do I have to still consider capital tax in my case with just 1 home and no other homes/property?

2. Yes, I understand this is not legal and correct. But some buyers are quoting property value more than the actual sale value (decided between buyer and seller) to banks to get more loan amount sanctioned by banks. This way, buyer do not have to pay much from their side.

But I was always concerned from seller's perspective because seller is not getting the high property value buyer quoted to bank for getting loan and seller will get only the amount which was decided between buyer & seller. In short, on papers, seller gets more amount but in reality he is getting less.

ajeet singh (1392 Points)
Replied 04 May 2021

Sale agreement more than the actual sale too dengerous for seller , his capital gain will increase and will increase tax amount and if u r actual sell value is showing in your bank statement it will deemed that rest of money is taken as cash which is strictly prohibited and violate the proviaions of section 269ss/st which attracts penalty equal to sum reveived in cash so think twice before doing such silly mistakes