) under section 56(2) vii) in case of buyer the difference between sale price and circle rate would be determined to be the income of purchaser and taxed under head income from other sources
Land purchased for market value, taxes paid on govt value
I am an NRI, work and live abroad. I have transferred my father crores of rupees to buy properties in India. He had purchased few acres of agricultural land as he’s a farmer and his passion is farming. I recently came to know that my father had paid the seller market value (over 20 times of govt value) but paid the taxes to government on govt registration value. As a result, all my hard earned and tax paid white money converted to black money. I do not want escape from the taxes, I want to pay tax on the market value without putting my father in trouble. Please advise.
Asked 3 years ago in Property Law
Religion: Hindu
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6 Answers
It is common in India to buy a property at market value and pay the government's fair price. In such a case, we pay the amount of money that is mentioned in the registered sale deed through a bank account and the balance in hard cash or black money. The registration has already been completed, and you have no option to declare the original sale place. Please understand that NRIs have no right to purchase agricultural land. In this case, you transfer the money to your father for the purchase. Do not cause confusion. and troubles
The registration department re-evaluates the property if it was sold below valuation and sends the notice to pay the balance registration charge based on their findings/ assumptions.
Under Fema and the Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, NRIs are not permitted to purchase an agricultural land or plantation property or farmhouse in India .Your transfer of money to your father should be considered as gift or loan . So you have no role in the sale transaction.
The government rate of land is always lesser than the market rate. Market rate is always more. This is done so that people do not purchase land at ridiculously low prices so as to evade taxes. One can sell anywhere above tge government rate/circle rate.
Now your father purchased at a price above the government rate which is perfectly legal. But he should have mentioned that price in the registry. If he didn't do that then that is illegal.
You should ask your father not to indulge in such transactions anymore.
Nowadays it is common although illegal to take some money under the table.
Since the mode of transfer of the black money is not known no advise can be rendered on this issue.
It is not a joke that one can transfer crores of rupees in black money evading the tax payable to government.
If at all you are going to take any legal action on this, then your father will be in trouble for tax evasion.
Further you have transferred this money to your father as a gift, hence it becomes his money and not yours, therefore there are no chances for you to take any action on this becasue you are not the person who has done this, your father has deliberately done this crime, think more times before you venture into proposed actions on this subject.
Dear sir,
1.the market value is always more than the govt. value. Govt. value acts as a cap which states min. value of the sale.
2. your father purchasing property at market value is completely legal and such should be mentioned in the registry. iF it is not mentioned it would be illegal.
thank you
- If the your father is paid the taxes on the basis of government value i.e. circle rate , then it will considered as valid transaction .
- However if there is deficient in paying the taxes , then your father can pay the same.
