Computation of the Value of Land and Building When Stamp Duty is Paid at Higher Rate

As per section 50C of the Income Tax Act, 1961 where value of asset if less than the amount taken for stamp duty calculation then Assessee Officer can asked for valuation of the property through valuation officer.

CONDITIONS

  • There is a transfer of land or building or both. It may be long-term or short-term capital asset. It may be depreciable or non- depreciable asset.
  • The sale consideration is less than value (stamp value) adopted by Stamp Duty Authority in respect of such transfer.

CONSEQUENCES IF THE ABOVE CONDITIONS ARE SATISFIED

  • The value (stamp value) adopted by Stamp Duty Authority shall be taken as full value of consideration for the purpose of computation of capital gain.
  • The table gives the full value of consideration in different situations-
Different situationsFull value of consideration for the purpose of capital gains
Where the assessee accepts the value adopted by stamp duty authority.Value adopted by stamp duty authority is taken as full value of consideration.
Where the assessee has disputed value adopted by stamp duty authority.The stamp duty valuation is taken as full value of consideration.
Where the assessee claims that stamp value is more than the fair market value
  • Fair market value determined by the valuation officer (if it is less than the stamp duty valuation) is taken as full value of consideration
  • Stamp value (if fair market value determined by the valuation officer is more than the stamp value) is taken as full value of consideration.

OTHER RELATED POINTS

  • Where an assessee objects to stamp duty valuation, the assessing officer is duty bound to refer the matter to the valuation officer
  • Section 50C is applicable only to section 45 of capital gain and it cannot be applied for determining business income under section 28 or any other income.
  • Section 50C is applicable in case of a transferor. It cannot be invoked for charging tax on undisclosed investment in the hands of transferee.

One thought to “Computation of the Value of Land and Building When Stamp Duty is Paid at Higher Rate”

  1. Can you pls explain: Whether the provisions of Sec.50C are squarely applicable to the transfers contemplated in Sec.45(3) & (4), specially w.e.f. 1.10.2009 ? An early reply will be highly appreciable.

Leave a Reply

Your email address will not be published. Required fields are marked *