Hi,
Can a owner say a higher value in the sale agreement for a plot, where as he will register for a lower value?
In this case, if he accepts the remaining money also through DD or cheque, how will the owner account for this extra money?
Will the buyer be in any problem because of this?
Difference in agreement value and registered value
Re: Difference in agreement value and registered value
Hi dhanesh,
First of all, this procedure is illegal. I have read in a newspaper recently that the Registrar offices have now started giving details of property transactions to the Income Tax department (I think the transactions for each week/month are sent in a batch). Though this directly impacts the seller, it could affect you too as it's illegal.
This will directly impact you when you choose to resell this property to someone else. When you do that, you are supposed to pay tax on capital gain (difference of the amount between your selling price and buying price, as per the agreement). Let's say, you've bought the plot for Rs. 20L but agreement has only Rs. 10L. When you resell it, most probably the price will be higher, lets say Rs. 25L (assume the agreement has Rs.25L this time). Actually, you would've earned a gain of Rs.5L for which you are supposed to pay tax. But, as per agreement, the gain is Rs.15L, which means you pay thrice the tax amount. Normally, people avoid this by following the same illegal procedure while reselling (making the agreement for Rs.15L lakh or so). It's like a vicious cycle.
So, the best thing to do is to avoid it in the first place. Hope this helps.
First of all, this procedure is illegal. I have read in a newspaper recently that the Registrar offices have now started giving details of property transactions to the Income Tax department (I think the transactions for each week/month are sent in a batch). Though this directly impacts the seller, it could affect you too as it's illegal.
This will directly impact you when you choose to resell this property to someone else. When you do that, you are supposed to pay tax on capital gain (difference of the amount between your selling price and buying price, as per the agreement). Let's say, you've bought the plot for Rs. 20L but agreement has only Rs. 10L. When you resell it, most probably the price will be higher, lets say Rs. 25L (assume the agreement has Rs.25L this time). Actually, you would've earned a gain of Rs.5L for which you are supposed to pay tax. But, as per agreement, the gain is Rs.15L, which means you pay thrice the tax amount. Normally, people avoid this by following the same illegal procedure while reselling (making the agreement for Rs.15L lakh or so). It's like a vicious cycle.
So, the best thing to do is to avoid it in the first place. Hope this helps.