As per Section 56(2)(x) of Income Tax Act, if the purchase price of a property is less than the stamp duty value and the difference is more than 5% of the purchase price or Rs 50,000 (whichever is higher), then the difference shall be treated as income in the hands of the buyer.
I got gratuity 3.4 years after date of retirement though the papers were submitted on time. Can I claim interest for the delay?
Section 7(3A) of Payment of Gratuity Act 1972 says that for delay in payment beyond 30 days from the date it becomes payable, employer is required to pay simple interest at the rates notified by the government unless the delay is due to fault of the employee. Hence, you can claim interest for the period of delay.
I purchased a house for Rs 24 lakh, but as per government guidelines its value is Rs 29 lakh. I paid stamp duty according to the guidelines. Will I have to pay any tax for the difference of Rs 5 lakh?
As per Section 56(2)(x) of Income Tax Act, if the purchase price of a property is less than the stamp duty value and the difference is more than 5% of the purchase price or Rs 50,000 (whichever is higher), then the difference shall be treated as income in the hands of the buyer. In your case, the differ-ence is more than 5% of purchase price, hence it can be taxed. Alternatively, you may choose not to pay tax but you will need to disclose this in your ITR and at the time of scrutiny, you may dispute that market value was actually lower and the concerned officer will refer the property for valuation.
I sold my property which was bought in 2007. I booked a flat in 2016 and got possession in 2018 after paying Rs 54 lakh. Do I have to pay capital gain tax?
—S D Kulkarni
Section 54 and Section 54F provide capital gains tax exemption if it is invested for purchasing a new house within one year before or two years after the date of sale or if a new house is constructed within three years. Booking of flat will be considered as construction of a house but the judiciary seems to be divided on allowing it as capital gain investment. The construction actually started before the date of sale and in the ruling on Farida A. Dungerpurwala wherein on similar facts, the Mumbai Tribunal held that exemption of capital gains shall not be allowed. However, another ruling of Mumbai Tribunal in Mustansir I Tehsildar allowed it stating that the primary condition is that construction has to be completed in three years and not necessarily when it started and this seems to be a better view. However, you have not stated when you actually sold your property and assuming that it was before the date of possession of new property, it shall be allowed.
The writer is partner, Ashok Maheshwary & Associates LLP. Send your queries to firstname.lastname@example.org