Capital Gains on Sale of Property at less than Government Value

1. Nature of Asset: Land or Building or both

2. Consideration for transfer: Amount is less than the value adopted or assessed by the State Government Authority (referred to as the “Stamp Valuation Authority for the purpose of payment of stamp duty.)

3. Value to be adopted for Capital Gains: Value adopted by the Stamp Valuation Authority.
Provisions for deemed valuation of immovable properly in certain cases of Transfer [Section 50C] [W.e.f. A.Y. 2010-11] — Further, new Explanation 2 has been inserted to section 50C(2) so as to clarify the meaning of the term ‘assessable’.
‘Explanation 2.—For the purposes of this section, the expression “assessable” means the price which the stamp valuation authority would have, notwithstanding anything to the contrary contained in any other law for the time being in force, adopted or assessed, if it were referred to such authority for the purposes of the payment of stamp duty’.

4. Reference to Valuation Officer:

(a) The assessee can claim that the value adopted or assessed by the Stamp Valuation Authority exceeds the Fair Market Value of the property as on the date of transfer.

(b) Value adopted by the Stamp Valuation Authority is not disputed before any authority or Court.

(c) In such case, the Assessing Officer may refer the case to the Valuation Officer.

(d) Where the value determined by the Valuation Officer exceeds the value adopted by the Stamp Valuation
Authority, the Capital Gain shall be considered as follows–
Capital Gains = Value adopted by Stamp Valuation Authority Less Cost or Indexed Cost of Acquisition.

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