Income Tax 2025

Appearance

Full value of consideration for transfer of assets other than capital assets in certain cases. ​

53(1) ​

In case of transfer of an asset (other than a capital asset), being land or building or both, if the consideration received or accrued from such transfer is less than the stamp duty, then such stamp duty value for computing profits and gains from transfer of such asset shall be deemed to be the full value of consideration.

53(2) ​

The provisions of sub-section (1) shall not apply if the stamp duty value does not exceed 110% of the consideration received or accrued and in such a case, the consideration received or accrued shall be deemed to be the full value of consideration.

53(3) ​

If the date of agreement fixing the value of consideration for transfer of asset and date of registration for transfer of such asset are different, then the stamp duty value as on date of agreement may be taken to be the full value of consideration under sub-section (1).

53(4) ​

The provisions of sub-section (3) shall apply only in a case where the amount of consideration or a part thereof has been received by specified banking or online mode on or before the date of agreement for transfer of such asset.

53(5) ​

For the determination of the value adopted or assessed or assessable under sub-section (1), the provisions of section 78(2) and (4) shall apply.

Explanation

Section Summary: ​

This section deals with the determination of the "full value of consideration" for the transfer of assets (other than capital assets), specifically land or buildings, when the actual consideration received is less than the stamp duty value. It ensures that the stamp duty value is used as the deemed consideration for tax purposes in certain cases, preventing underreporting of transaction values.

Key Changes: ​

  1. Deemed Consideration Rule: If the consideration received for the transfer of land or building is less than the stamp duty value, the stamp duty value will be treated as the full value of consideration for tax purposes.
  2. 110% Threshold: If the stamp duty value does not exceed 110% of the actual consideration, the actual consideration will be deemed as the full value of consideration.
  3. Date of Agreement vs. Registration: If the agreement date and registration date differ, the stamp duty value as of the agreement date can be used, provided certain conditions are met.
  4. Payment Mode Condition: The agreement date rule applies only if the consideration (or part of it) is received through specified banking or online modes by the agreement date.

Practical Implications: ​

  1. For Taxpayers: Sellers of land or buildings must ensure that the consideration aligns with the stamp duty value to avoid higher tax liabilities. If the consideration is significantly lower than the stamp duty value, the stamp duty value will be used for tax calculations.
  2. For Businesses: Real estate transactions must be carefully documented, especially when the agreement and registration dates differ. Payments must be made through specified modes to benefit from the agreement date rule.
  3. For Compliance: Taxpayers must maintain proper records of transaction dates, payment modes, and stamp duty values to substantiate their tax calculations.

Critical Concepts: ​

  1. Stamp Duty Value: The value assessed by the government for calculating stamp duty on property transactions. It is often based on circle rates or ready reckoner rates.
  2. Deemed Consideration: A legal assumption that the stamp duty value is the consideration for tax purposes, even if the actual amount received is lower.
  3. Specified Banking or Online Modes: Payments made through methods like bank transfers, cheques, or digital platforms as per the Income Tax Act.

Compliance Steps: ​

  1. Verify Stamp Duty Value: Check the stamp duty value of the property at the time of agreement and registration.
  2. Align Consideration: Ensure the consideration is at least 90.9% (100/110) of the stamp duty value to avoid deemed consideration rules.
  3. Document Transactions: Maintain records of the agreement date, registration date, and payment receipts through specified modes.
  4. Use Specified Payment Modes: Ensure payments are made through banking or online channels by the agreement date to benefit from the agreement date rule.

Examples: ​

  1. Scenario 1: Mr. A sells a property for ₹90 lakh, but the stamp duty value is ₹100 lakh. Since the consideration (₹90 lakh) is less than the stamp duty value (₹100 lakh), the full value of consideration for tax purposes will be deemed as ₹100 lakh.
  2. Scenario 2: Ms. B sells a property for ₹95 lakh, and the stamp duty value is ₹100 lakh. Since the stamp duty value (₹100 lakh) does not exceed 110% of the consideration (₹95 lakh × 110% = ₹104.5 lakh), the actual consideration of ₹95 lakh will be deemed as the full value of consideration.
  3. Scenario 3: Mr. C agrees to sell a property on January 1, 2023, and registers it on March 1, 2023. The stamp duty value on January 1 is ₹80 lakh, and on March 1, it is ₹90 lakh. If Mr. C received ₹75 lakh through a bank transfer by January 1, the stamp duty value of ₹80 lakh (as of January 1) will be deemed as the full value of consideration.

This section ensures transparency and prevents tax evasion in real estate transactions by aligning tax calculations with government-assessed values.