Abhijit Banerjee (HR) 04 January 2013

Income tax on selling of house property

I need some guidance in the following areas-

I had purchased a house property in the year 1990 at 40 lacs, which I am selling now at 90 lacs.

Now I have two queries -

(1) If the Govt's scheduled valuation for stamp duty for this property is 80 lacs, on which amount I require to pay Income tax -

Capital gain = 80 lacs (Govt valuation of the property) - 40 lacs (my purchase value) = 40 lacs

Capital gain = 90 lacs (Actual selling price of the property) - 40 lacs (my purchase value) = 50 lacs

(2) If the Govt's scheduled valuation for stamp duty for this property is 100 lacs, on which amount I require to pay Income tax -

Capital gain = 100 lacs (Govt valuation of the property) - 40 lacs (my purchase value) = 60 lacs

Capital gain = 90 lacs (Actual selling price of the property) - 40 lacs (my purchase value) = 50 lacs

Further, please also guide me to know whether this liability comes to the seller or to the buyer?

Your kind guidance in this areas are solicited.

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2 Replies

Prasun Chandra Das (Banker) 04 January 2013

The "selling price" is the only criteria, not the stamp duty/price determided by Govt.

R RAJAGOPALAN (ADVOCATE) 04 January 2013

The method would be:

Capital gain = 100 lacs (Govt valuation of the property) - 40 lacs (my purchase value) = 60 lacs

However,

i) you can claim the indexed cost of acquisition (instead of the mere Rs 40 lakhs), and the indexed cost of improvement (if any), and the expenditure ( ex: brokerage) if any incurred for the purposes of the sale;

ii) you can claim that the fair market value of the property was much less than the value determined for stamp valuation purposes, in which case the Assessing Officer will refer the valuation, to a Valuation Officer.