Relevance of stamp duty value of a property under income tax laws


To plug the loopholes in realty transactions and to avoid litigations, the tax Department benchmarks the valuation of property against its stamp duty valuation. For levy of stamp duty on property, state governments start with an annual handbook of rates for valuation of the property. This can be additionally referred to as circle rates in north India.

During this article, I will discuss a number of the vital provisions of tax laws that sit down with the stamp tax valuation of a bit of property. Allow us to discuss.

Eligible property for additional benefits of interest

Section 80EEA permits a deduction of up to Rs 1.50 hundred thousand once a year in respect of interest on home loans sanctioned between the first Gregorian calendar month 2019 and thirty-first March 2022 for a residential property stamp duty valuation that doesn’t exceed forty-five lakh rupees. 

This deduction is obtainable given that the assessee does not own the other house property on the date of sanction of the house loan. It’s going to that this deduction is obtainable throughout the development amount additionally not like deduction beneath Section 24(b) that is available solely when completion of construction.

However, there’s no provision for carrying forward this deduction just in case financial gain isn’t spared to line off this deduction.

Computation of long-run capital gains on the sale of recent residential property

Capital gains are computed by deducting the price of acquisition from the sale consideration. For house property sold out when holding for quite 2 years, you’re allowed to boost the cost inflation index that helps you cut back your final tax liability. 

In respect of property nonheritable before first Gregorian calendar month 2001, you are allowed to require the truthful value of the house thereon date effectively makes the appreciation until thirty-first March 2001 untaxed in your hands. 

To plug this loophole and to minimize litigations, to produce that the fair market value of the property sold-out shall not be not up to the stamp duty valuation of the property as of first Gregorian calendar month 2001 if notified by the state government.

For vendee of the property

Beneath the tax laws, once a property while not a consideration, a similar is treated as a present within the hands of the recipient. In alternative cases to avoid litigation, the tax laws give for a tolerance limit of up to 10% of the agreement value.

So, when the property thought is inadequate, the next of fifty thousand rupees or excess distinction over 10% of the agreement worth is taxed within the hands of the transferee unless the dealing is between such relatives. 

Within the case of a developer purchasable of properties not lined higher than the tolerance, the limit remains 10% over the agreement value. From the above discussion, it becomes clear that one has to remember the stamp tax valuations of a bit of property once stepping into any purchase/sale of property in India.

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