Sale of property at a lower value

Tax planning 613 views 3 replies

Mamata

student

232 Points Joined June 2009

Hi All,

Recently was asked about a Tax plannin measure to be sought for a client who is intending to sell a falt at a price lower than its prevailing market price.

The concerned person had purchased the falt in A.Y. 1996-97 and now wantz to give it out to a relative.

Stamp Duty would be paid at the market price ascertained.The person would end up paying tax if the Market Price is considered.

Is there a way out?Also that the sale is at a lower value because the place has not b maintained.

Please help!

Replies (3)

CA Saiyum khan

Practicing CA

690 Points Joined November 2008

Selling the flat at lower than the market value i.e for the stamp duty valuation will attract section 50C and AO will consider the market value for the purpose of capital gain.

You may see if assessee have incurred some cost of improvement during the tenure of holding the property.

Further there is exemption u/s 54 if the capital gain is invested in another residential house property.

Mamata

student

232 Points Joined June 2009

Thanks for the input.

Is there a remedy in case the sale is effected at a lower price? Or would the person hav to end up paying CG even when there would be no gain actually?

There are no improvement expenses.

CA Saiyum khan

Practicing CA

690 Points Joined November 2008

It depend upon the facts and figures. If the actual consideration is very nominal and person buying flat is close relative then the title may be transferred throug gift deed as well.