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Ramalingam Kalirajan |10881 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Apr 27, 2024

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more

Asked by Anonymous - Feb 23, 2024Hindi

Hello Patrick, I'm planning to purchase a land in Bengaluru, there are 2 options , register at Govt Guidance value or at market price, which is better option, and what will be the capital gains implications if we register on guidance value and sell in future Thanks

Ans: When it comes to registering property, deciding between the government guidance value and the market price depends on various factors.

Registering at the government guidance value can offer advantages such as lower registration fees and potentially reduced tax implications. However, it's crucial to ensure that the guidance value aligns with the actual market value of the property to avoid any legal or tax issues in the future.

On the other hand, registering at the market price reflects the true value of the property and can provide a more accurate representation of its worth. While this may result in higher registration fees and taxes, it can offer greater transparency and legal protection.

Regarding capital gains implications, if you register the property at the government guidance value and sell it in the future at a higher market price, you may be subject to capital gains tax on the difference between the sale price and the guidance value. It's essential to consult with a Certified Financial Planner or tax advisor to understand the specific tax implications and plan accordingly.

Ultimately, the decision between government guidance value and market price registration depends on your individual circumstances, risk tolerance, and long-term goals. Consider consulting with professionals to ensure you make an informed decision that aligns with your financial objectives and legal obligations.

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.

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Question by Neeraj - Oct 03, 2022Hindi

I booked a house from builder in March 2012 with basic price of Rs 30.89 lakh + gst of around 3%. I paid around Rs 12.37 lakh + gst by July 2012 and balance of Rs 18.52 lakh approx + gst by 31.05.2013 in equal monthly installments. In March 2016, I paid EDC of approx Rs 1 lakh, Rs 1.43 lakh as freehold charges, stamp duty of Rs 2.27 lakh and registry charges of Rs 0.20 lakh aggregating Rs 35.79 lakh + gst. Total cost including gst is approx Rs 37.00 lakh. The registry was executed in January 2017. Now, I expect to sell my property in September 2022 at a consideration of Rs 72 lakh. I have the undernoted questions: 1. Shall I get indexation benefit from the date of payments made to the builder or date of registry? 2. Do I need to open capital gains account or can I realise the sale proceeds in my regular savings account and invest the LTCG in the chosen bonds? 3. Do I need to deposit the entire sale proceeds in the notified bonds or only the LTCG after indexation and rest money utilize in whatever way I like without attracting tax? 4. Will GST be included in the cost of acquisition of my property?

Ans: Indexation benefit will be available from the date of payments made to the builder.

If you want to avail tax exemption by investing in bonds, you have to invest amount of taxable capital gain (derived after taking benefit of indexation), in bonds within 6 months of transfer of property.

Accordingly, sale proceeds can be realised in regular saving account and can be kept till the time you invest in specified bonds.

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