The first question while finalizing a property deal for many buyers and sellers is "how much in white" and "how much Black". i.e. how much black money will be paid to execute the sale deed. People take extra ordinary initiative to register the property at circle rate and to pay the balance amount of sale value in cash, just to save a small percentage of stamp duty. Let us analyze the impact of such transaction.
Tax Implication
Suppose you have purchased a property for Rs. 50 lacs and registered it for Rs.
20 lacs and paid the balance amount in cash.
You have saved 5% or 6% of stamp duty. But what is the tax impact on this
improper transaction.
Suppose you sold the property after 3 years for 20% margin. If you register the
sale deed for its full value, your Capital Gain tax liability will be on Rs. 40
lacs (Rs. 60Lacs (Sale Value) - Rs. 20 Lacs (Registered Purchase Value). You
have not saved anything through this transaction and created huge tax liability.
If you did the same transaction in a property way i.e. at the time of purchase
you have registered the property for its full purchase value and paid stamp
duty, your capital gain tax liability on sale value will be a very small amount
after indexing. Here you have saving of very big amount than you saved in stamp
duty.
Authenticity of Transaction
If you show have shown lesser amount in the sale deed at the time of purchasing
property, anybody can question you for purchasing the property at low value. You
may have paid the market value, but as per the record you have paid lesser
amount and anybody can raise question about authenticity of the transaction and
may cause blackmailing you.
Property Loan
Showing full purchase value in sale deed will always help you to get maximum
amount of property loan.
Question of Black Money
When you pay part of purchase cost of the property in cash and not shown in sale
deed, the money you paid will always be counted in Black Money. This will be
considered as violation of different laws and will result in harassment and
financial liability.
So, do every transaction with care and believe only in genuine transaction.
Meeting Requirements of Companies as per Indian Companies Act, 1956
Directors meeting requirement as per Indian Companies Act, 1956
Borrowing power of a company and its limits as per Indian Companies Act, 1956
Income Tax Appeal rejected by ITAT due to non appearance, then what? Remedies and Options
Personal Liability of Directors or Members - Indian Companies Act, 1956
Hindu Undivided Family (H.U.F) or Joint Hindu Family form of Business
Deemed Public Company - Section 43-A of Indian Companies Act, 1956
Register your property at the actual sale price, else more liability will follow
Precautions while purchasing Property
Rights of Promoters of a Company - Indian Companies Act, 1956