When stamp duty treated as sales price - Fusion - WeRIndia

When will stamp duty be treated as sales price

When will stamp duty be treated as sales price

If you are buying a land or flat, you have to pay a specific amount as stamp duty. Normally, stamp duty is paid on the government value of that asset.

In certain cases, if the buyer proceeds for the market value and goes for the amount to that extent, then stamp duty is paid on such amount.

Generally, government value or stamp duty value is less than the market value. So, there will be no problem for the buyer or seller.

However, in certain cases, the market value is less than the stamp duty value, then how much will be stamp duty?


Is it according to the market value? No. In such cases, the stamp duty value is taken into consideration as it is treated as sales price.

If the price of a land or building is less than the stamp duty, then the stamp duty value is treated as the sales price and the seller is taxed on a notional basis based on the capital gain for that value.

Similarly, the buyer is also taxed for the difference amount treating it as income from other sources. This is irrespective of actual agreement value.

Sometimes, people want to sell their buildings that are under construction. This may due to delay in construction process or they want to buy another better building or flat. Due to financial needs also, they might want to sell such flats.

In such cases, due to urgent cash needs, the seller may sell his flat below the stamp duty valuation.

In such situations, the buyer has to pay the tax for difference amount between actual agreement value and stamp duty value. However, the value of the year of receipt of flat and not the value of the year of agreement is taken into consideration here.

But, if the agreement is entered into for purchase of flat before the date of registration, and payments are made through banks like draft, cheque, net banking etc., then the stamp duty value of the flat on the date of agreement is taken, but not the value on the date of receipt of the flat.

Image Credit: House Buy Fast / CC BY 2.0


Image Reference: https://www.flickr.com/photos/housebuyfastworthing/45841713292

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