Property Buyer Needs to Pay Tax at 1% if Costs Rs. 50 Lakh or More

By Mr. Suresh Surana, RSM Astute Consulting Group

Question:

I am planning to sell one of my house, which I had built 4 years ago, to a firm. What would be the tax implications...? - Mr. Ravinder Singh

Answer by Mr. Suresh Surana, RSM Astute Consulting Group

The transfer of a house (flat), it being a capital asset, is subject to capital gains tax in the hands of the transferor.

As the house has been held by you for more than 36 months (3 years), the gain on its transfer will be treated as long-term capital gain (LTCG), taxable at 20 % plus applicable surcharge & education cess.

Suresh Surana, RSM Astute Consulting Group

Further, the benefit of indexation will be available. Under section 50C, if the sale consideration is less than the stamp duty value of the house, then the stamp duty value will be considered as full value of consideration for the purpose of calculating capital gain.

Reinvestment benefit under Section 54 can be availed.

Recently, the Union Finance Bill 2013 proposes to impose an obligation on the buyer of an immovable property to pay tax at 1 per cent where the total amount of consideration is Rs. 50 lakh or /  more.

Accordingly, the firm will be required to pay tax either at the time of making the payment or /  credit, whichever is earlier, at 1 per cent.





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