Evasion of capital gain tax
Tayib
(Querist) 17 January 2013
This query is : Resolved
Hi,
I am in Pune, Maharashtra and i am about to buy a land in a housing soceity. Scenario is:
> Govt. valuation of the property is 25 Lakhs. Total Deal Value is 45 Lakhs.
> Bank will pay 35 Lakhs directly to current seller as per my loan application.
> I will pay additional 10 Lakhs to seller to make it a full 45 lakhs.
As per the agreement all tax liabilities arising on the seller due to the sale will have to be paid paid by me. I know it is funny, but that is how it is.
Questions are:
1) How much Capital Gain tax will the seller have to pay?
2) Also, how do i ensure that the seller has paid tax if i DONT involve the bank and pay the entire amount from my pocket? This is important, because, it should not be like i am being charged the tax to be paid but the actual tax is not paid at all as i will be handing over cash/transfer to seller.
3) Does the housing society ensure that the tax is paid on the transaction or is it left to the seller to pay once he receives the money?
Tayib
(Querist) 17 January 2013
Any expert on Capital Gain Taxation please respond. Thanks.
C. P. CHUGH
(Expert) 19 January 2013
Normally Taxes on Income are to be paid by the Person earning Income (including Capital Gains) but under special obligations the liability is owned by other persons like Employers discharging his employees tax liability as part of contract. In Your case, if you have agreed to bear the burden of Seller's Tax Liabilty, you can make sure that you pay the actual amount of tax discharged by the seller. You may ask him to produce payment of actual tax so that you can reiburse it. You may take assistance of a Tax Practitioner in calculation the actual tax burden which depends of various factors of date and cost of acquistion, indexing thereof.
Raj Kumar Makkad
(Expert) 19 January 2013
I do endorse the opinion of Ld. Chugh Saab.
