Bailabel Type : bailable

Description

Section 50C of the Income Tax Act, 1961 is a provision related to the calculation of capital gains on the transfer of immovable property, specifically land or buildings. It applies in cases where the sale consideration stated in the sale deed differs from the stamp duty value of the property, i.e., the property’s value as determined by the local authorities for the purpose of stamp duty.

Key Provisions of Section 50C:

---

1. Applicability of Section 50C

• Applicability: Section 50C comes into play when the sale consideration (the price at which the property is sold) is less than the stamp duty value (the value of the property as determined by the local authority for the purpose of registration and stamp duty). In such cases, the stamp duty value is deemed to be the full value of consideration for the purpose of calculating capital gains.

  • Example: If a person sells a property for ?50,00,000 but the stamp duty value determined by the local authorities is ?60,00,000, then the capital gains will be computed using ?60,00,000 as the sale price, rather than the ?50,00,000 stated in the sale deed.

---

2. Full Value of Consideration

• The full value of consideration for the transfer of immovable property is considered to be the stamp duty value if it is higher than the actual sale consideration mentioned in the sale agreement.

  • Stamp Duty Value: The stamp duty value is typically determined by the local sub-registrar based on market values, location, and other parameters set by the government. This value is used for purposes such as registration and stamp duty calculations.

---

3. When Sale Consideration is Higher than Stamp Duty Value

• If the sale consideration exceeds the stamp duty value, the actual sale consideration (the higher value) will be used for calculating capital gains.

  • Example: If the sale consideration is ?80,00,000 and the stamp duty value is ?70,00,000, then the capital gains will be calculated using ?80,00,000.

---

4. Provision for Reconciliation in Case of Discrepancies

• Reconciliation Mechanism: If the taxpayer believes that the stamp duty value determined by the authorities is excessively high and does not reflect the true market value of the property, they can approach the Assessing Officer (AO) and request a valuation report from a Registered Valuer.

  • The Assessing Officer may accept the valuation report from a qualified professional if it reflects the true market value of the property. If the report supports a lower valuation than the stamp duty value, the taxpayer can seek adjustments based on the market value as established by the Registered Valuer.

---

5. Transfer of Land or Building

• This provision specifically applies to the transfer of land or building or both. For the purposes of this section, land or building includes any residential or commercial property or any property that is being used for some productive purposes.

---

6. No Impact on Other Assets

• Section 50C does not apply to other types of capital assets, such as stocks, bonds, shares, or non-immovable property assets. It is specifically aimed at immovable properties (i.e., land and buildings).

Punishment

If the taxpayer does not report the correct sale consideration or attempts to conceal the sale consideration by undervaluing the property, penalties may be imposed under Section 271(1)(c) for concealment of income. The penalty can range from 100% to 300% of the tax evaded.

Interest for Late Payment: If the taxpayer fails to pay taxes due to incorrect reporting of the sale price or undervaluation, interest may be levied under Section 234A, 234B, and 234C for late payment of taxes.