Arun Kumar Das (Trading) 28 July 2019

Builder asking me to bear capital gains tax

I signed a sale agreement with a builder in Kolkata in 2006 and moved in to the flat in 2008. All payments were completed by then. However I did not register the flat due to my fund problems. The value of the sale agreement is Rs.45 lakhs, the value now as per circle rate (registration value) is Rs.1.20 crores. Now that I am approaching the builder for registration, he is asking me to first compensate him for the capital gains he will have to pay - he claims he will have to pay capital gains tax on the registration value as per notification of 2013. My tax consultant however tells me this was amended in AY 2019-20. Please help.

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Jagadeesh Birkodikar (Proprietor) 07 August 2019

How a builder liable to pay Capital Gains Tax? He is the builder and for him your building is stock in trade. Even though you pay stamp value for 1.2 crore registration of property can be made for 45 lakhs. But you are liabel to pay tax on difference i.e., 1.2 Cr - 45 lakhs.

You can find out what builder has treated your building is. Then rest can be decided as per law.