Purchase of property which is below S.D.V

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  1. Reddi.M

    Reddi.M New Member

    Whenever purchase of a property for Consideration which is less than the STAMPDUTY value. The difference amount will be taxable. Suppose iam purchasing land for 2400000 for which guideline value is 7640000. How can i pay huge amount of tax. We were paying tax because of source of income, But here such amount is not an income for me????
     
  2. sai tejesh(ca.final)

    sai tejesh(ca.final) Active Member

    If you purchased land for less than sdv value it means that you are indirectly earning more and more income.say for examples....
    a)If you give above land for rent, within few years you can recover total of your investment.or

    b)even if you sale above land during the current year itself you can gain nearly RS.5000000/-.or

    c)if you use the above land for agricultural purpose also you can recover your investment within a spam of few years.
    As a conclusion at any point you see you are indirectly earning more income.
    So in order to control this avoidence of tax income tax department introduced this section 56(2)(vii)
     
    Last edited: Feb 20, 2015
    Parul_Gupta and Sahil Oberoi like this.
  3. Reddi.M

    Reddi.M New Member

    Then what the cost of my land Mr.Sai? whether 2400000 (or) 7640000?
     
  4. Reddi.M

    Reddi.M New Member

    tell me the accounting treatment for that?
     
  5. sai tejesh(ca.final)

    sai tejesh(ca.final) Active Member

    When comes to tax treatment, your cost of acquisition is 7640000 not 2400000.why because...
    At the time of purchase of asset,difference between sdv value and actual cost of purchase is taxable u/s 56(2)(vii).

    And when we comes to accounting treatment..If accounting standards which were issued by ICAI is applicable to you then...
    As per AS10 if you have an intention to use the above land for your business purpose then you should state that asset at actual cost.. instead of sdv value.
     
  6. Reddi.M

    Reddi.M New Member

    Im asking the accounting entry for that difference value man???
     
  7. Reddi.M

    Reddi.M New Member

    So that difference im not considering anywhere .how can i pay the tax?? How can i consider it as income??
     
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