Taxation for incresease in land registration value
Guest
(Querist) 21 July 2015
This query is : Resolved
Dear sir,
I am going to purchase a plot of 218 sq.yard in our town through loan.But as government value is 4000 in that area I'll get loan very less .So we have increased Govt value to 9200.So now the seller is saying that we have to pay tax of 20% on capital gain.But he bought that site in 2007.Is this correct to pay what he says? PLease suggest me in this.
Anirudh
(Expert) 21 July 2015
You are your own enemy.
What you are trying to do is not increasing the Govt.value. In fact you are nobody to increase the Govt. Value. Whether to increase or decrease is the job of Govt. and not yours.
In fact, what you are doing is that you yourself are artificially increasing the per square yard purchase consideration to Rs. 9200/-, so that based on that artificial value you can get increased loan. Your thinking is that by getting increased loan, you will be able to pay to the seller at the rate of Rs. 4000/- per sq.yard and purchase the 218 sq.yard land.
Have you ever thought, that the same value i.e. Rs. 9200/- per sq. yard has to be shown in the Sale Deed also which will be registered before the Sub-Registrar? That will again increase the amount of stamp duty?
Further, unless you pay the increased value of Rs. 9200/- per sq. yard, the seller will not sell the land to you. (your thinking that he will sell at govt. value of Rs. 4000/- per sq. yard is only your wishful thinking)
Thirdly, having agreed to purchase the land at the higher value of Rs. 9200/- per sq. yard, if you do not ultimately purchase, the seller can approach the court and seek specific performance of the contract i.e. force you to pay Rs. 9200/- per sq. yard and take the land?
Yes, the seller is right, if he shows Rs. 9200/- in the sale deed as selling price, then he has to pay the capital gain on the increased amount.
The only silver lining in your case is that you are only thinking of purchasing and have not so far entered into any agreement as proposed by you.
YOUR IDEA IS HIGHLY DETRIMENTAL TO YOUR INTERESTS. PLEASE DO NOT DO ANYTHING WHICH IS ARTIFICIAL AND NOT REALITY. If you are not able to get the required loan, then you have to wait till such time you have adequate funds for purchasing the property.
Rajendra K Goyal
(Expert) 21 July 2015
Well advised by the expert Anirudh, agree to it.
Guest
(Querist) 23 July 2015
Dear Sir,
Thanks for your suggestion
Yes!am not enough to increase govt value as you said .But Seller is selling his property at Rs.11000/- per sq.yard.If seller purchase at 4000/- per sq.yard then i wouldn't have go for loan.
Sir may i know how much tax there will be on
capital gain if we do so.
Anirudh
(Expert) 23 July 2015
Dear Mr. Prasanth,
I am sorry. It was you who said that as you would be getting very less amount of loan in case the Government value of Rs. 4000 is shown, "so we have increased Govt value to Rs. 9200".
If the seller himself is selling the property at the rate of Rs. 11000 per sq.yard, then it is he who has to pay the capital gain tax, and the same cannot be recovered from you.
Guest
(Querist) 25 July 2015
Sir,
Thanks again.Seller knows that we are going for registration at Rs.9200/- instead of Rs 4000/- ,so he is telling that as I increased the registration price I have to pay the Tax,which will be of 20% on capital gain (as he said) .I don't know how far it is correct as am not aware whether there will 20% Tax of capital gain on which he bought (plot) in 2007.
Please tell me whether there will be 20% of Tax and is it correct to pay be me?
Anirudh
(Expert) 25 July 2015
You are proposing to purchase 218 sq.yard plot @ Rs. 9200/- per sq.yard.
Will you be actually paying Rs. 20,05,600/- (218 x 9200)?
Guest
(Querist) 25 July 2015
Sir, Sorry it is 219 sq. yards.Actually am buying plot at 10,900/- per sq.yard.So i should pay Rs.23,87,100./-(219x10,900)
But the price of Rs.9,200 is mentioning in only registration for loan purpose.
Anirudh
(Expert) 25 July 2015
Better stop playing tricks here.
If you are actually paying Rs. 10900/- per sq.yard, why would you show only Rs. 9200/- in the sale deed?
I am sorry you are not coming with full and true facts. There is no point in answering query of such person(s).
Guest
(Querist) 26 July 2015
If I want to play tricks no need to discuss this with you .I can do myself .And whats the use of playing tricks with you?Are you aware that whatever the market rate you proposed to buy you should go for registration on govt rate. like that am buying at market rate of 10,900/- per sq.yard and doing registration at Govt rate Rs.9,200/- per sq.yard(actual govt rate is Rs.4000/- per sq.yard.But for loan purpose we will do registration for Rs.9,200/-) Still you if you don't understand leave it .
Guest
(Expert) 26 July 2015
For a Perfect reply from Qualified Professionals in Taxation the Chartered Accountants Please Consult the CA Club Of this same Forum whose Email ID is just below in this Thread.
Guest
(Querist) 26 July 2015
Thanks a lot Expert:Raj kumar
Anirudh
(Expert) 26 July 2015
Still you don't answer why you will show only Rs. 9200/- in the sale deed per sq.yrd. when you actually pay Rs. 10,900/- per sq.yrd. to the seller?
In any case, in the given fact situation, how the seller can say "he is telling that as I increased the registration price I have to pay the Tax".
When you are actually paying 10,900/- where have you increased the price? Rather, you are in fact trying to show (unnecessarily) lesser price of Rs. 9200/-.
Guest
(Expert) 26 July 2015
You are Welcome Please.
