Agreement for sale / Sale Deed / Stamp Duty

[ngupta]

Thanks for your judgement. I think you should better get in to LOKPAL team.

1. There is nothing wrong to MINIMIZE, even if paying to GOVT as long as it is right and legal way.
2. Second eventually I did not went in to that deal bcos of this.
3. Wonder what experience and expertise you people have to judge others on online forum.
4. No one told any new.
5. I brought up the way someone is doing, as they told it.
We all know what kind of things all developers are doing around.

But it appears today's internet have made all anonymous members like bboy or blrsiteseeker,
to become judges, rather saying beware don't get in to that trap.

In Hindi there is one saying, "Neem Hakim khatrain jaan".
All half-learned so called experts.

Dear friend,

It surely appears that you were trying to 'minimize' (a politically correct substitute for the word 'evade') the stamp duty as much as possible. No, the government is not trying to get the minimum amount of stamp duty. I guess it is clearly stated in the law and any lawyer worth his salt would know it that the stamp duty is to be paid on the higher of either guidance value or the actual transaction amount. That is, if your transaction value is less than the guidance value, then you pay stamp duty on the guidance value and if the transaction value is more than the guidance value, then you pay stamp duty on the transaction value. If those two are equal, then it is your choice on which one you want to pay the stamp duty on .

The mere fact that you are paying by cheque or DD doesn't automatically make your full transaction white even though there are checks and balances to ensure bank transactions are using white money. Also, the question of white money is related to income tax department, while that of stamp duty is related to the revenue department. They may be inter-linked in some way though, especially for traceability purposes.

Also, I am not sure if any bank would actually fund a transaction for more than the legally declared value. Also, how would you legally document that you have paid the seller the amount shown in the sale agreement?

Your attempt to look Innocent was too transparent, especially when you 'assumed' the legal way is the one when you pay the government less!

Regards,

bboy

don't want to argue any more. seems like you have not read my message clearly either. Never mind - let's cut it here.

[bboy]

I am not entirely convinced what the 'LOKPAL team' is doing is the right thing; especially with members who claim IT exemption of heart surgery cost as 'expenditure for maintenance of plant and machinery'!

1. There is a fine line between minimization and evasion and it appeared that you were seeking ways to cross that.
2. If you were so convinced you are doing the right thing, then you should have gone ahead with the deal.
3. Well, you came here seeking the 'experience and expertise' of the people here; what exactly did you expect to find here?
4. Sorry, I can't figure out what you are trying to say here with my limited knowledge of the English language.
5. I guess you came here because you were not convinced what others are doing is probably right. And quite a few of us who answered you felt what the developers are doing is not the right and legal way to do things. People tried to honestly answer your queries but you felt offended and became a bit argumentative!

Isn't it an irony that today's Internet allowed you to post a question easily and people responded. Unfortunately, you were looking for people who condoned your ways of doing things and that didn't happen. Also, you did not post the qualification of people from whom you were expecting answers. The first couple of posters did tell you not to get into that trap, but you didn't want to hear that!

Again, isn't it ironic that you are judging others as"half-learned so called experts"? Did you get any honest legal opinion to discredit what we were saying so that you could judge us?

Once again, there may be ways to AVOID paying the required full stamp duty and registration charges by presenting outright lies and half truths. But none of them are legal and truthful ways to MINIMIZE the duties and charges!

Thanks for your judgement. I think you should better get in to LOKPAL team.

1. There is nothing wrong to MINIMIZE, even if paying to GOVT as long as it is right and legal way.
2. Second eventually I did not went in to that deal bcos of this.
3. Wonder what experience and expertise you people have to judge others on online forum.
4. No one told any new.
5. I brought up the way someone is doing, as they told it.
We all know what kind of things all developers are doing around.

But it appears today's internet have made all anonymous members like bboy or blrsiteseeker,
to become judges, rather saying beware don't get in to that trap.

In Hindi there is one saying, "Neem Hakim khatrain jaan".
All half-learned so called experts.

Dear friend,

It surely appears that you were trying to 'minimize' (a politically correct substitute for the word 'evade') the stamp duty as much as possible. No, the government is not trying to get the minimum amount of stamp duty. I guess it is clearly stated in the law and any lawyer worth his salt would know it that the stamp duty is to be paid on the higher of either guidance value or the actual transaction amount. That is, if your transaction value is less than the guidance value, then you pay stamp duty on the guidance value and if the transaction value is more than the guidance value, then you pay stamp duty on the transaction value. If those two are equal, then it is your choice on which one you want to pay the stamp duty on .

The mere fact that you are paying by cheque or DD doesn't automatically make your full transaction white even though there are checks and balances to ensure bank transactions are using white money. Also, the question of white money is related to income tax department, while that of stamp duty is related to the revenue department. They may be inter-linked in some way though, especially for traceability purposes.

Also, I am not sure if any bank would actually fund a transaction for more than the legally declared value. Also, how would you legally document that you have paid the seller the amount shown in the sale agreement?

Your attempt to look Innocent was too transparent, especially when you 'assumed' the legal way is the one when you pay the government less!

Regards,

bboy

don't want to argue any more. seems like you have not read my message clearly either. Never mind - let's cut it here.

[tvsh]

Mr blrsiteseeker,

I think you have got it wrong and don't be emotional.

Note no one is trying to save bucks or beat system with loopholes.

It is told to me that it is THE way to do things by legal guy, for which I am seeking opinion for cross check.

I think you have got it wrong. Technically you can get away by doing this way. In fact that is the way business is done. Government expects you to pay tax on the full sale value of the property. But since no one likes to pay tax and everyone declares a value much lesser than the sale value, the government has fixed a minimum value as "guidance Value". This is only to ensure that the governement atleast gets some decent amount as tax. If not, what is stopping everyone from declaring they bought the property for Rs 1?

There is a practical difficultly in India. when I bought my site, Even though I was willing to declare the full amount and pay the tax, I could not find any seller who was willing to accept full money in white. So everyone who is doing above is not necessarily corrupt, unfortunately, that is the way business is done.

Further, say you have MARBLE house and your neighbor has very simple house.
Yet both pay same tax as per covered area, but not value of house.

Even here, I think the value of the house is taken into consideration while arriving at the value of the house. I am staying in a rental place and had the corporation authorities come over and access the property tax, they did ask if the whole house had granite flooring or only a part of the house and they did measure the house.

Note full transaction is CHEQUE and no one is doing anything unlawful.

Cheque or DD or cash hardly matters. white or black can come in any form. If I have under reported my income and not paid income taxes on the whole income, even though I am paying by cheque, it is still black money.

I am not judging your actions as morally right or wrong. It is up to you what you want to do. This dual payment system is widely practised and one sometimes have to do it, whether they like it or not.

[bboy]

I do agree that it may be difficult to find a buyer who is unwilling to take full white money, but it still wouldn't make it legal if you make part payment in black. Of course, we can always walk out of the deal if we are not comfortable with the sellers terms. Generally most sellers will take full white provided you pay them more. It is our eagerness to save some money that generally leads to paying in black. It is up to each individual to do what he or she wants to do, but they just can't claim what they are doing is legal. The politicians who loot the country also have the "practical difficulty"; they have spent a lot to get elected to that position, has no other decent income, and need a lot of money to run their political organizations. But those arguments don't make their corrupt practices legal or moral. I have seen a lot of people cut corners and do things not so legally, and still stand up on the soap box to profess that they have not done anything illegal!

Also, we are all happy not to pay our fair share of taxes, but are quick to blame the government for bad roads and not providing other facilities. I have a friend who is in the forefront of the anti-corruption campaign, but she had no qualms claiming her trip to US to get a divorce as a business trip and claim tax deduction on that! Her excuse? She is paying "more than enough" taxes to the government!

[ngupta]

bboy, wonder what you read and what you reply. It has nothing to do with your limited english knowledge.
It is self-constructed weird attitude to blindly preach others, which you need to correct.

You are mere irritating character and have no awareness and know-how.
So just suggest and don't preach.

Bcos I was not convinced by developers and expert like you, so I asked question here.

Tone of few people here was very much offending,
as if I knowingly trying to do something wrong.
Wonder why i'll make it public too.

Please look for definitions of suggestion, advice and preaching.

[bboy]

I am sorry, I irritated you because I couldn't find any loopholes in the law to give you the exact answer you were looking for; that it is alright to "minimize" the duty and fees by under declaring the sale value. May I "suggest" that you refrain in future from asking questions on a public forum if you are unable to digest some of the responses?

You were questioning my qualifications to respond to your question. Would it suffice to say that I am an investor who buy and sell high value properties pretty regularly and has no issues declaring the full value of sale and paying appropriate taxes? I have a a couple of good lawyers who look into all aspects of these deals. Though they are pretty good at interpreting the law, sometimes there are suggestions to cut a few corners and make a little more, but I refuse to do so on legal and moral grounds. Yes, it is pretty hard to find sellers and buyers who will comply with these requirements of mine but believe me, there are people out there whose moral values are still intact and want to be legal all the way. I also make considerably less profit this way, but the important thing is that I still make a profit and that is good enough to sustain me. More important, the tension free life and good sleep you get at night is priceless!

No more postings on this topic from me

bboy, wonder what you read and what you reply. It has nothing to do with your limited english knowledge.
It is self-constructed weird attitude to blindly preach others, which you need to correct.

You are mere irritating character and have no awareness and know-how.
So just suggest and don't preach.

Bcos I was not convinced by developers and expert like you, so I asked question here.

Tone of few people here was very much offending,
as if I knowingly trying to do something wrong.
Wonder why i'll make it public too.

Please look for definitions of suggestion, advice and preaching.

[tvsh]

Generally most sellers will take full white provided you pay them more. It is our eagerness to save some money that generally leads to paying in black. It is up to each individual to do what he or she wants to do, but they just can't claim what they are doing is legal.

Well that "more" you claim is usually 20% of the difference between the guidance value and market value, which is the capital gains tax the seller has to pay. That is not pocket change and is a significant sum. Buyer is expected to pay the stamp paper duty and not the tax liability of the seller, who in any case has made a good profit from the sale. It would be legally and morally incorrect for anyone to expect the buyer to pay more (the capital gains tax liability of the seller), so that one accepts the full payment in white. If the government had done it's job and prosecuted the first few violators, then such a dual system of payment would not have been practiced widely. when we have such impractical system, it is unfair to judge others. So to each his own.

[bboy]

Evading tax because what you have to pay is "not pocket change" is still not a morally and legally valid reason! It is like saying "I will be of good moral character and abide by the laws as long as it cost me only "pocket change"; as longs as it is more than that, I will ONLY brag about eradicating corruption which costs me nothing"! Dear friend(s), in the end it is up to you to do whatever you like, so let me just buy peace!

Basically you are not paying more when you pay in full white, rather you are getting a discount - part of the 20% the seller saves - when you pay part in black!

Generally most sellers will take full white provided you pay them more. It is our eagerness to save some money that generally leads to paying in black. It is up to each individual to do what he or she wants to do, but they just can't claim what they are doing is legal.

Well that "more" you claim is usually 20% of the difference between the guidance value and market value, which is the capital gains tax the seller has to pay. That is not pocket change and is a significant sum. Buyer is expected to pay the stamp paper duty and not the tax liability of the seller, who in any case has made a good profit from the sale. It would be legally and morally incorrect for anyone to expect the buyer to pay more (the capital gains tax liability of the seller), so that one accepts the full payment in white. If the government had done it's job and prosecuted the first few violators, then such a dual system of payment would not have been practiced widely. when we have such impractical system, it is unfair to judge others. So to each his own.

[tvsh]

Evading tax because what you have to pay is "not pocket change" is still not a morally and legally valid reason! It is like saying "I will be of good moral character and abide by the laws as long as it cost me only "pocket change"; as longs as it is more than that,

Well that is your interpretation. I said, the buyer is responsible for his tax liabilities and there is no legal or moral basis to expect him to bear the tax liabilities of the seller. The pocket change example was used to convey that if it is a small amount, one does not bother much and pay up in order to complete the transaction, when the difference is huge, then the question arises as to who should bear the tax liability.

I will ONLY brag about eradicating corruption which costs me nothing"! Dear friend(s), in the end it is up to you to do whatever you like, so let me just buy peace!

who is bragging about corruption here. You are the only taking about eliminating corruption. My point is government also has a responsibility to maintain a practical and fair system that allows people to abide by law and cannot put all the onus on the taxpayer.

Basically you are not paying more when you pay in full white, rather you are getting a discount - part of the 20% the seller saves - when you pay part in black!

That is your assumption. I have never come across an advertisement that shows two different rates one for the whole transaction in white and the other for part payment in black and white. If you do not believe me, go look at the rates for 30x40 sites in dattagalli 3rd stage, mysuru today. It is around 22 lacs to 24 lacs. The gov't auction of sites last week (for site numbers 1078 ...1090, ) with a reserve price of 24 lacs did not elicit any bidders and they had to change the reserve price to 21 lacs and re-auction them. The re-auction is I think on Aug 18th. As you are aware, All auction sites have to be paid in white and registered to their full value.

Let us agree to disagree.

[bboy]

Also, it is true that you have not seen any advertisements with two different prices, but just try telling the seller that you will be paying everything in white and need to keep proper payment records; then come back and tell me if he is still willing to sell the property to you for the advertised price. The converse is also true; that is, if the seller is the one who is asking for full white, then the buyer will naturally quote less! Also, not sure in what way the government is responsible for this inflow of black money. High stamp duty and registration charges or high income taxes? Either way, the black money business is not going to go away even if the duty and tax rates are brought down!

I am not disagreeing with any of the examples you have given. You are also agreeing that people are dealing in black money. The only disagreement seems to be that you and some others think it is legally and morally right to deal in black money and "minimize" tax, but I totally disagree with that and say that tax "evasion" for whatever reason is not right both morally and legally.

Evading tax because what you have to pay is "not pocket change" is still not a morally and legally valid reason! It is like saying "I will be of good moral character and abide by the laws as long as it cost me only "pocket change"; as longs as it is more than that,

Well that is your interpretation. I said, the buyer is responsible for his tax liabilities and there is no legal or moral basis to expect him to bear the tax liabilities of the seller. The pocket change example was used to convey that if it is a small amount, one does not bother much and pay up in order to complete the transaction, when the difference is huge, then the question arises as to who should bear the tax liability.

I will ONLY brag about eradicating corruption which costs me nothing"! Dear friend(s), in the end it is up to you to do whatever you like, so let me just buy peace!

who is bragging about corruption here. You are the only taking about eliminating corruption. My point is government also has a responsibility to maintain a practical and fair system that allows people to abide by law and cannot put all the onus on the taxpayer.

Basically you are not paying more when you pay in full white, rather you are getting a discount - part of the 20% the seller saves - when you pay part in black!

That is your assumption. I have never come across an advertisement that shows two different rates one for the whole transaction in white and the other for part payment in black and white. If you do not believe me, go look at the rates for 30x40 sites in dattagalli 3rd stage, mysuru today. It is around 22 lacs to 24 lacs. The gov't auction of sites last week (for site numbers 1078 ...1090, ) with a reserve price of 24 lacs did not elicit any bidders and they had to change the reserve price to 21 lacs and re-auction them. The re-auction is I think on Aug 18th. As you are aware, All auction sites have to be paid in white and registered to their full value.

Let us agree to disagree.