NA industrial land dastavej
Sourabh Bansal
(Querist) 04 August 2008
This query is : Resolved
We are purchasing a land (20,000 sq. m)in gujarat for setting up an industrial unit. The land is presently agricultural. It will be first be converted into non-agricultural (industrial) land and then dastavej will be done in company's name. The revised jantri rates for the location are Rs. 40 per sq. m. for agricultural and Rs. 600 per sq.m. for industrial NA land. The transaction is taking place at approx. rs. 50 per sq.m. As the dastavej will be taking place after na conversion I understand that we will require to pay the stamp duty & registration fees as per Rs. 600 per sq. m... But what will be the value on which dastavej should be done and also what will be the basis of income tax calculation?
GOPI KRISHNA
(Expert) 04 August 2008
though the stamp duty is payable on the guiidence value set by the Dept of Stamps for the purpose of registation of sale deed, considaration for sale you may mention Rs 50/- Sq Mt and the said amount will be the amount for income tax calculation
Srinivas.B.S.S.T
(Expert) 04 August 2008
To think in the otherway why cant you register the land in agricultural status and then change the usage of the land, in that way you can save the stamp duty also.
Sourabh Bansal
(Querist) 04 August 2008
thanks for your replies to the query...section 50c of income tax says that tax will be calculated based on stamp valuation officers valuation (ie. jantri) if dastavej is of lower value...
to buy the land before NA process it will have to be done in a farmer's name and not on company's name (a company can't buy agricultural land)...then that farmer will have to become a partner in the project to contribute land as equity contribution (again in this case it seems section 50c will prevail and valuation will be done on jantri rates..please correct me if i am wrong here)...
now the land does fall outside municipal limits (more than 8 kms.) and the village has a population of less than 10,000...does this mean that as per capital gains tax act this is a rural agricultural land and is exempt from capital gains tax? (please note that land will be converted to NA when the sale takes place).
Srinivas.B.S.S.T
(Expert) 05 August 2008
Yes the tax will be collected on the basis of stamp value but you can mention that the sale is below the stamp value fixed by the Govt and you have to obtain the affidavits of the sellers to that effect. To my knowledge there is no bar for a company to acquire agricultural land. After all the company is a legal entity, it can have assets on its own name whether they are commercial or agricultural. Capital gains tax is attributable to the seller but not to the purchaser.
GOPI KRISHNA
(Expert) 05 August 2008
Mr Sourabh
You are right that the company can't buy agriculrural land and as you said by including farmer as partner, farmer can't contribute agricultural land as equity
the better option is convert the land as industrial and register the land in companies name
as regards income tax concession take a affidavit from the vendor/farmer that he has received the sale considaration amount of Rs.. towards sale of land
