I needed some advice regarding a tax situation in India. Please find below the sequence of events.
- 24/12/2005 --> I purchased a property for 60 lakhs in Chittor India. (Paid about 58 in white but the stamp duty was paid for 30 lakhs only).
- 7/12/2007 --> Sold the above property for 130 lakhs. (70 lakhs of it was white and stamp duty paid. The rest was paid to me in cash).
- 19/2/2014 --> The buyer received a notice to pay up 21.5 lakhs(30% of the profit(70-35 lakhs) + interest for the delay) as the buyer/me didn't know to deduct the TDAS at the time of the registration. Given that I sold within 2 years of buying the property this was marked as short term capital gains.
- 05/05/2014--> Buyer paid the 21.5 lakhs and cleared it.
While I was in India in July the buyer approached me and asked me to reimburse the tax paid by him. I offered the buyer 12 lakhs, which he didn't take and demanded all of the money. Please let me know if I am legally obligated to pay and if there are any consequences that I have to account for.
