Relevance of stamp obligation worth of property beneath revenue tax legal guidelines

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One has to concentrate on the stamp obligation valuations of a chunk of property when coming into into any buy or sale of property in India.

In an effort to plug the loopholes in actual property transactions and to keep away from litigations, the Earnings Tax Division benchmarks the valuation of property in opposition to its stamp obligation valuation. For levy of stamp obligation on property, numerous state governments come out with an annual prepared reckoner of charges for valuation of property. That is additionally referred to as circle charges in north India.

On this article, I intend to debate a few of the essential provisions of revenue tax legal guidelines which confer with stamp obligation valuation of a chunk of property. Allow us to focus on.

Eligible property for extra advantages of curiosity

Part 80EEA permits a deduction as much as Rs 1.50 lakh yearly in respect of curiosity on house loans sanctioned between 1st April 2019 and thirty first March 2022 for a residential property stamp obligation valuation of which doesn’t exceed forty-five lakh rupees. This deduction is obtainable provided that the assessee doesn’t personal some other home property on the date of sanction of the house mortgage.
It could be famous that this deduction is obtainable through the development interval additionally not like deduction beneath Part 24(b) which is obtainable solely after completion of development. Nevertheless, there is no such thing as a provision for carry ahead of this deduction in case revenue isn’t enough to set off this deduction. The valuation of property for this deduction has been benchmarked to keep away from misuse of this provision the place the settlement worth could also be saved at a decrease quantity simply to assert this deduction.

Computation of long-term capital positive aspects on sale of previous residential property

Capital positive aspects are computed by deducting the price of acquisition from the sale consideration. For home property offered after holding for greater than two years, you might be allowed to boost the price of acquisition by making use of value inflation index which helps you cut back your final tax legal responsibility. In respect of property acquired previous to 1st April 2001, you might be allowed to take the truthful market worth of the home on that date which successfully makes the appreciation until thirty first March 2001 tax free in your fingers.

For the aim of arriving on the truthful market worth of the home property, both you’ll be able to take stamp obligation reckoner charges if accessible or you could receive a valuation certificates from a registered valuer. Individuals used to get the valuer’s certificates of decrease quantity than the precise truthful market worth of the property to minimise their tax legal responsibility. In an effort to plug this loophole and to minimise litigations, the legislation was amended to supply that the truthful market worth of the property offered shall not be decrease than the stamp obligation valuation of the property as on 1st April 2001, if notified by the state authorities.

In case your settlement worth is decrease than the present stamp obligation charges, you might be deemed to have acquired the consideration equal to the stamp obligation valuation and the distinction is taxed as capital positive aspects along with the capital achieve computed as per your settlement worth.

For Purchaser of property

Underneath the tax legal guidelines when a property is transferred with out consideration, the identical is handled as reward within the fingers of the recipient. In different circumstances with the intention to keep away from litigation, the tax legal guidelines present for a tolerance restrict of upto 10% of settlement worth. So, when the property is transferred and the consideration is insufficient, greater of fifty thousand rupees or extra distinction over 10% of the settlement worth is taxed within the fingers of the transferee except the transaction is between specified kinfolk.

Nevertheless, in case the property is bought from a developer as first allotment of the property between twelfth November 2020 and thirtieth June 2021, the client enjoys the next tolerance restrict of 20% over the sale consideration for properties with sale consideration upto Rs 2 crore. The identical tolerance restrict can be accessible to a developer whereas computing his enterprise income. In case of a developer on the market of properties not coated above the tolerance restrict stays 10% over the settlement worth.

From the above dialogue, it turns into clear that one has to concentrate on the stamp obligation valuations of a chunk of property when coming into into any buy/sale of property in India.

(The creator is a tax and funding knowledgeable and will be reached at

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