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How will ito treat this situation ?

Tax queries 344 views 4 replies

One of my uncle purchased a plot in rural area 25 years ago . Till now there is a no devlopment . He purchased that plot for rupees 50000 . Plot size was 3200 sq feet . Now he decided to sell his plot for rupees 1 lakh but according to govt guideline plot cost will reach beyond 4 lakh .

I am interested in that plot and want to buy that . But respected experts , i have a quarrey ...

If i purchased that plot in 1 lakh by giving cheque to him . Then how ito will trat the difference amount ( 400000 - 100000 = 300000 ) . He is in need thats why he is seeling . i Have some amount then i am interested in buying ... Am i right ? Can i enter in this deal . if i enter then what will be response from ito ? if ito will also add the difference amount ( 3 lak ) in my income then will it be right ? Please suggest the right way ...

Replies (4)

Since u say such plot is situated in rural area (please read the definition of rural area), then CG is not taxable in the hands of the seller, as such asset is not regarded as capital asset. Hence there may not be any tax liability even to the buyer for inadequate consideration.

Respected poorniam ji :: I think , The area which is situated very far from city or urban area or outside muncipal corporation boundry , where Panchayati raj works called Rural Area . The plot is also situated very far from city , outside muncipal corporation boundary and also where there is a plot , panchayati raj works . Panch and sarpanch are there .

Now , is that plot in rural area ? if yes then , can i buy that plot for rupees 1 lakh which is less than govt guideline rate ?

Yeah, u can buy it if u r sure that the plot is in rural area in which case there will not be any taxability on account of inadequate consideration in ur hands. Utility to check whether urban area: https://www.incometaxindia.gov.in/Pages/utilities/Agriculture-Land-in-Urban-area2014.aspx.

according to link provided by you , i checked and it is showing that my land is an agriculture land .

thank you so much for your kind response poornima ji . Your are the reason for my today's smile . thank you .


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