PURCHASE OF PROPERTY AND CAPITAL GAINS

THE PURCHASE OF PROPERTIES, WHERE THE CONSIDERATION(PRICE) IS LESSER THAN THE GUIDANCE VALUE OR THE RATE FIXED BY THE DG REGISTRATION, AS DECLARED BY THE BUYER, ATTRACTS THE CAPITAL GAINS TAX AND WOULD BE TAXED ACCORDINGLY AS PER SECTION 50C OF THE FINANCE ACT.

THE PURCHASE OR TRANSFER, EITHER THROUGH  A REGISTERED SALE DEED OR THROUGH A GPA,  THE PURCHASER MUST QUOTE AND PAY THE CONSIDERATION PRICE AT THE PRICE/VALUE FIXED BY THE VALUATION COMMITTEE, OF DEPARTMENT OF STAMPS AND REGISTRATION,WHICH HAD BEEN PUBLISHED IN THE GAZETTE, AND IS QUOTED AS GUIDANCE VALUE.  THUS IT IS VERY CLEAR THAT IN VIEW OF SECTION 50 C, ALL THE BUYERS AND SELLERS, WHILE CALCULATING THE CAPITAL GAINS PAYABLE ON THE STAMP DUTY VALUATION.

THUS THE IMPACT WOULD BE THAT THE VALUE ADOPTED BY THE STAMP DUTY AUTHORITY WOULD BE DEEMED TO BE THE FULL VALUE OF CONSIDERATION RECEIVED, AS A RESULT OF TRANSFER OF PROPERTY.


ALL THE SELLERS WHO MAY BE COMING WITHING THE  AMBIT OF THIS ACT SHOULD CAREFULLY PLAN AND PAY ADVANCE TAX. FAILURE WILL INVITE PENAL PROCEEDINGS AND 24% PER ANNUM.  THE ACT IS IN FORCE FROM THE FINANCIAL YEAR 2003-2004.  ALL THE ASSESSES AND BUYERS OF PROPERTIES, SHOULD SUBMIT THE TAX RETURNS, TAKING INTO ACCOUNT THE PROVISIONS OF THE SAID ACT.


FOR EXAMPLE:  

THE PURCHASE OF A PROPERTY OR TRANSFER OF PROPERTY IS NEGOTIATED FOR xxxxx CONSIDERATION.  THE GUIDANCE VALUE FIXED BY THE VALUATION AUTHORITY OF DEPARTMENT OF STAMPS AND REGISTRATION IS yyyy, THOUGH THE ACTUAL CONSIDERATION PAID IS xxxx BUT UNDER THE PROVISIONS OF SECTION 50 C OF THE FINANCE ACT OF 2002, THE CAPITAL GAINS TAX WILL BE CALCULATED ON THE yyyy AND WILL BE TAXED ACCORDINGLY.