Income tax Act Section 50C

[shamji bhanushali]

our client has purchased one flat in Ghatkopar mumbai. he has paid advances against his flat in year 2009 with one particular rate. Builder has given possession in year 2014 when my client has paid full amount. when agreement made in 2014 rate of stamp duty rate was high i.e.Agreement value lower then stamp act value. now mater is observe by Income tax department that it is violation of section 50 C AND it is chargeable for tax on difference amount. can you advise for this or give us any Judgment regarding section 50C AS PER MY PROBLEM.

[DR.MARIAPPAN GOVINDARAJAN]

The department is right in demanding the differential tax.

[Ganeshan Kalyani]

It is usual practice of the builders to undervalue the property for stamp duty purpose and black money is demanded. thus how would a common man come to know about the appropriate market value while entering for agreement.

AI Summary

Deemed valuation under Section 50C leads to tax on the difference when stamp duty value exceeds agreement value. Section 50C deems the stamp duty valuation as the full value of consideration where it exceeds the agreement price, rendering the difference between stamp duty value and contract price taxable as capital gains. This applies irrespective of earlier advances paid at lower rates when the agreement is executed later at a higher stamped value, and is triggered frequently where builders declare lower agreement values for stamp duty purposes.