Stamp Charges

Tax queries 827 views 6 replies

Hi,

  iam having a doubt, Pl clarify as early as possibly.

Suppose a person sells a property (as per agreement between purchaser & seller,seller has to bear the stamp/registration chatges ) for Rs.3 crores inclusive of Rs. 30 lacs as stamp charges.Just tell me what will be the sale consideration & whether stamp charges born by the seller, can be treated as an allowable expenditure as per Income Tax act?

Clarify whether Sale Consideration will be 3 crores or 2.70 crores(i.e excluding stamp charges)

with regards

wani

Replies (6)

Dear Wanishree,

Stamp charges paid by seller will be allowed as deduction as follows-

1) if capital asset - "as expenses on transfer"

2) if business asset - a) if WDV Becomes nil or negative or entire block is transfered (i:e computation is made u/s 50) - "as expenses on tranfer"

b) if wdv is + & there r assets in the block  - "business expenditure u/s 37(1) subject to sec 43 Bon payment basis.

Dear Wanishree,

Stamp charges paid by seller will be allowed as deduction

i.e. expenses on transfer...Selling expenses/legal expenses....

Thanq but pl tell me what will be the sale consideration.Is this correct calculation:

   Sale Consideration                         -3,00,00,000

Less:Stamp/registration charges   -    30,00,000

Balance                                                =2,70,00,000

Yes, it is correct. Refer Sec.48. From the balance u have to deduct Indexed Cost of acquisition /improvement in case of Long Term capital assets otherwise only Cost of acqisition/improvement to find out Capital Gain.

Dear Wanishree,

Sales Consideration would remain 3 crores

Sec 48,

Sales Consideration              = 300 Lacs

Cost/Indexd COA                    =  (xxx)

Cost/Indexed COI                    = (xxx)

Expenses on Transfer             =(30 Lacs)

No Wanishree,

Mr.Amir brother is right..

sale consideration           -     30000000

Less: Expenses on sale/transfer- xxxxxxx

Net consideration                         - 3crore - xxxxx

Less: (Indexed)Cost of acq    -        (xxxxxx)

            (indexed) cost of imp    -          (xxxx)


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