It should go without saying that if the title to the real estate is flawed, its market worth will be significantly diminished. In simple words, a disputed property loses a lot of its market value. I believe this is one of the reasons why Section 50C was introduced. Section 50C was created by the taxman to target real estate transactions involving the sale of immovable property (land, buildings, or both) for less than the circle valuation rate (or stamp duty valuation rate). Here, in my answer, I will tell you is 50c applicable on disputed property or not.
If you have more queries regarding property laws, consult the legal experts NoBroker, here.Is section 50c applicable when the property is under litigation?
According to Section 50C, capital gains are determined by taking into account the stamp duty valuation rate as the consideration paid on transfer in the event that a seller transfers immovable property for less than the rate at which the stamp duty is assessed. In these situations, the property is said to be under litigation. The consideration agreed upon by the seller and buyer would be superfluous because capital gains tax would still need to be calculated and deposited based on the government's valuation rather than what the parties may mutually decide to declare "on paper." In other words, any intentional undervaluation of the property by the seller would not affect the government's income tax fund.
Is 50c applicable on disputed property sold below circle rate?
According to Section 50C, if a property is sold for less than the circle rate, the circle rate is regarded to be the price at which the property was sold, and capital gains tax is assessed as if the property had been sold at the circle rate.
No matter the amount of the purchase price, if the property was sold for less than the circle rate, the circle rate would be deemed to be the sale price, and capital gains tax would be due.
However, the Assessing Officer may ask the Appraisal Officer to do a property valuation if the taxpayer argues before them that the property's fair market value is actually less than the Circle Rate. In the event that the Valuation Officer conducts a valuation and determines a value that is less than the Circle Rate, the value so determined would be regarded to be the Sale Price. If the value thus determined is greater than the Circle Rate, the Circle Rate would be deemed to be the Sale Price.
As a result of the foregoing, it is evident that the sale price that will be taken into account for capital gains purposes can only be decreased in the event that a reference is made to the valuation officer.
I hope now you know is 50C applicable on disputed property or not.
Read More: Is TDS Applicable on Sale of Agricultural Land? Is GST applicable on rental income from commercial property?Your Feedback Matters! How was this Answer?
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Is 50C Applicable on Disputed Property?
Brinda
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2022-11-30T10:58:17+00:00 2022-11-30T10:58:18+00:00Comment
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