Payment under the guideline value

Querist : Anonymous (Querist) 19 August 2024 This query is : Resolved
I intend to purchase a flat on the topmost 15th floor of an apartment which remained unsold for the past seven years because of lack of car parking slot for this flat . Recently one of the flat owners sold his flat at the guideline value of Rs. 8000 per sq.Ft. . My seller is willing to sell it to me at Rs. 5000 per Sq.Ft . I am willing to pay the stamp duty at guideline vale of Rs. 8000 per Sq.Ft. and pay the seller lesser value. Will it be considered as undersale of Rs 3000 per Sq. Ft. and attract any tax ? Is the guideline value the same for all the floors ?

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T. Kalaiselvan, Advocate (Expert) 19 August 2024
You can register the property at the sub registrar guidance value if it's lower than the selling price of the property. But if your property cost you less than the guidance value, you cannot choose to register at the lesser value.
In the hands of the Sellers, such Stamp valuation will be deemed to be the Sale Consideration. Also in the hand of the buyer since the property is being acquired at less than fair market values such difference will be taxable as Income from Other sources u/s 56(2)(x).

P. Venu (Expert) 19 August 2024
Circle rates could have been taken as one of the factors and not the last word on the subject. The other factors being:-
i) the price agreed upon between the vendor and the vendee
ii) whether it was a distress sale
iii) whether the price in the local area had gone down/escalated - at the time of the sale
iv) Other relevant factors
It has been held by the Supreme Court that "that circle rates have been held to constitute only one of the factors to be taken into consideration. Circle rates cannot be regarded as the last word on the subject. This Court in the case of R. Sai Bharathi v. J. Jayalalitha & Others (2004) 2 SCC 9 held that:-

"22.....The authorities cannot regard the guideline valuation as the last word on the subject of market value....."
"24....It is clear, therefore, that guideline value is not sacrosanct as urged on behalf of the appellants, but only a factor to be taken note of if at all available in respect of an area in which the property transferred lies....."

Hence you have option to get the market value fixed by the competent valuation officer and the property registered at lesser stamp duty, if the market value is assessed to be lesser than guideline value.

Querist : Anonymous (Querist) 19 August 2024
Thank you for your kind replies.
Is the guidline value the same for the flats in the First floor and the 15th floor of an apartment ?
What about the flat without a car parking facility while all other flats are provided the same . In this case it is distress sale for the seller . Is there a possibility for lowering the guideline value because of lack of a service facility ?
Anyway I am willing for registering the sale deed at the guideline value even if higher than the amount I pay my seller. What is the relief from paying tax under Section 56/2

kavksatyanarayana (Expert) 20 August 2024
You must pay the stamp duty and registration charges on the consideration (sale value agreed by the buyer and seller) or Market Value guidelines whichever is higher. The income tax shall be payable on the value of the stamp duty you have paid.

P. Venu (Expert) 21 August 2024
"Is there a possibility for lowering the guideline value because of lack of a service facility ?"
The remedy is in getting the valuation done by the competent authority.

"What is the relief from paying tax under Section 56/2"
As already suggested, the obvious remedy in getting the valuation done and remitting the stamp duty accordingly.

Else, you have the option to challenge the constitutionality of the said provision under the Income Tax Act in the Constitutional Court.

Payment under the guideline value

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