Special provision for the full value of consideration in certain cases.

S-50C of IT Act, 1961

Consideration received from the transfer of a capital asset, being land or building or both

At a Value less than SDV – STAMP DUTY VALUE(for the purpose of payment of stamp duty in respect of such transfer)

The STAMP DUTY VALUE (SDV) shall be deemed to be the FVC (full value of the consideration) received or accruing as a result of such transfer.

What date shall be adopted for Computing Full Value Consideration (FVC)?

Where the date of the agreement for fixing the amount of consideration
And
the date of registration for the transfer of the capital asset is not the same,

the value adopted by the stamp valuation authority on the date of agreement may be taken.

Provided that the amount of consideration, or a part thereof, has been received by way of:

  • 1. A/c payee cheque or
  • 2. A/c payee bank draft or
  • 3. Electronic clearing system through a bank account or
  • 4. Through such other electronic mode as may be prescribed,

on or before the date of the agreement for transfer.

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Relaxation:-

Where SDV <= 110% of Consideration (as a result of the transfer),

Actual Consideration so received shall be deemed to be the FVC

What Happens If the Seller Does Not Accept the Value Adopted by SVA?

There is a possibility that the value adopted by Stamp Valuation Authority (SVA) may not be depicting the FMV at all times or the seller himself may not be satisfied with the value adopted by Stamp Valuation Authority (SVA) based on factors known to him.

Though stamp duty is generally borne by the purchaser, the purchaser may not be very concerned with the value adopted by SVA as it will be its cost of purchase.

S-194-O Payment of certain sums by the e-commerce operator to participant 

However, it makes a huge difference to the seller as it impacts his income tax which can be substantial based on the value.

 

As it is a matter of income tax for the seller, he is allowed to question the value adopted by SVA and claim the value is more than FMV under Section 50C before the income-tax authority unless such value is already questioned before any other authority or court.

In such cases, the income tax officer is required to make a reference to the valuation officer and market value will be determined by such a valuation officer.

The valuation officer, while determining market value, has to call for records/ documents from the taxpayer if required and give the taxpayer an opportunity of being heard and passing an order in writing, stating his valuation. Any value determined by the valuation officer can also be questioned before higher authorities.