Capital gains in land sale....

Uma 1
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I wanted to know about the capital gains. Suppose a land cost 1 Crore and i buy from a promoter, and i need 80 lakhs loan. The bank says it will consider the value as 50 lakhs + 50 Lakhs, meaning for stamp paper buying we consider the land value as 50 lakhs(which is well above the guideline value), so stamp paper for this 50 lakhs alone, and the rest 50 lkhs will be treated as land development cost and will write a separate agrrement with the promoter. so in this case i will save the stamp paper for the seond 50 lakhs part.

The bank says this option is only because i am buying from a promoter, who has spent cost on laying road on the layout etc.

While selling the land i want to know that can i show that i purchased it for 1 Crore or will it be considered that i paid only 50 Lakhs(as in stamp paper) and the capital gains will be more in this senario, if they consider that i paid 1 crore then obiously the capital gain tax will be less. which senario the tax authorites will consider is my question

The bank says that for the second 50 lakhs, the builder will sign an agreement in 20 rupees stamp paper saying that he received 50 lakhs from me as land development cost. So i can show that i spent a total 1 Crore, is that correct?

One more thing, this option i am getting only in Icici bnk and not in LIC(lic says to register for 1 crore). is icici bank fine to bank with.

residential-land stamp-duty capital-gains
1 Answers

Purchase cost for capital gains computation would include value as per registration documents plus any amount spent on construction, stamp duty and any brokerage paid.

In case registration value is less than government notified circle rate, then govt circle rate would be considered.

Pankaj Batra5212

i have placed the development agreement agreement from the promoter , so any amount in this agreement will it be excluded form the capital gains.

DEVELOPMENT AGREEMENT

THIS DEVELOPMENT AGREEMENT ENTERED INTO AT H, ON THIS ____ DAY OF 2012, BETWEEN:

Mr. X, son of Mr. X, , hereinafter referred as Vendor and duly represented by his authorized General Power of Attorney Agent Mr. Y, son of Mr Y, who shall herein after called the FIRST PART

AND

Mr. Z, son of Mr. ____, aged about __ years, who shall hereinafter called the SECOND PART

The terms PARTY OF THE FIRST PART and the PARTY OF THE SECOND PART wherever the context so requires or admits, shall mean and include themselves, their nominees, executors, legal representatives, successors – in – interest and assigns.

NOW THIS AGREEMENT WITNESSETH AS FOLLOWS:

1) The Party of the FIRST PART is promoting Plot No.A, approved layout vide Planning Permit No.1252/2012, vide Letter No.5030/12.

2) The Party of the FIRST PART agrees to develop the SECOND PART Plot No. A, Comprising an area of N Square Feet, premises for the developement cost of Rs. B/- (B only)

3) The Party of the SECOND PART has paid a sum of Rs._/- (Rupees ___ only), in the following manner:

a) A sum of Rs._/- (Rupees ____ only), by way of Cheque No.___, dated _, drawn on ___.,

b) A sum of Rs._/- (Rupees ____ only), by way of Cheque No._, dated __, drawn on __,

In all aggregating to Rs._/- (Rupees ___ only)

4) The Party of the SECOND PART hereby agrees and undertakes to pay the balance of sale consideration of Rs._/- (Rupees ___ only), to the Party of the FIRST PART.

5) The PARTY OF THE FIRST PART have agreed to develop and finish all the works listed below a) Compound wall with a height 5 feet plus throughout the layout and neatly plastered and painted.

b) Filling of earth throughout the area layout with proper levels and forming of roads with rock boulders and black topping it with fayer and compressing with static rollers.

c) Laying of motorable black top roads.

d) Cost incurred in arranging for filling earth and raising the level of the Schedule property in order to make it suitable for house construction and related development.

e) Removing all trees, shrubs, wild growth and clearly surveying and demarcating the Schedule property with boundary stones

f) Avenue trees with tree guards and maintained for One year

5) The PARTY OF THE FIRST PART further agree to complete any left over development work on the schedule property as and when requested by the PARTY OF THE SECOND PART

6) It is agreed between the PARTIES herein that this Agreement shall be treated to be fully consumed and fulfilled upon the execution and registration of the sale deed in respect of the Schedule Property by the PARTY OF THE FIRST PART in favour of the PARTY OF THE SECOND PART

SCHEDULE OF PROPERTY

All that piece and parcel of Vacant Land, bearing Plot No.A, approved layout vide

East to West - on the Northern side D Feet, - on the Southern side D Feet, North to South - on the Eastern side D Feet, - on the Western side D Feet,

In all admeasuring an extent of N Square feet or thereabouts and bounded as follows:

NORTH BY : A1, SOUTH BY : A2, EAST BY : A3 WEST BY : Road. .

IN WITNESS WHEREOF THE PARTIES HERETO HAVE, AFFIXED THEIR HAND AND SIGNATURE ON THE DAY, MONTH AND YEAR FIRST ABOVE WRITTEN IN THE PRESENCE OF THE FOLLOWING WITNESSES:-

1.

                             PARTY OF THE FIRST PART

2.

                        PARTY OF THE SECOND PART
Uma•

I don't think it can be added to purchase cost for capital gain computation. Please consult a experienced CA/tax professional in this matter.

Pankaj Batra•
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