Can property be sold below circle rate?

The circle rate is the lowest price at which a piece of land, a ready-to-move-in home, or a business property you can list for sale. In various areas of the city, there are various circle rates. A circle rate is a great instrument for limiting investments in real estate prices. So let me tell you about the Supreme Court ruling for immovable property sold below circle rate.

Is selling property below circle rate possible?

According to Section 56(2)(x) of the Income Tax Act, 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. Then capital gains tax is charged as if the property had been sold at the circle rate. This tells you can property be sold below circle rate or not.

However, the assessing officer may ask the appraisal officer to do a property appraisal if the taxpayer argues before them that the property's fair market value is actually less than the Circle Rate. If the valuation officer does a valuation and

• If the value determined by the valuation officer is less than the circle rate, the value would be regarded as the sale price.

• If the valuation officer determines a value that is higher than the circle rate, the circle rate would be regarded as the sale price.

As a result of the above, 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.

What is the importance of circle rate?

The Circle Rate has the following important details to keep in mind:

• The minimum rate or price is established by the state or local development body.

• Making sure that each site is listed against the right pricing index is the main objective of determining a circular rate.

• A circle rate is used to symbolise a property's pricing.

• Usually, it costs less than what is offered in the market.

• The rate of real estate transactions is continually growing.

This is the Supreme Court ruling for immovable property sold below circle rate.

Let’s explore the implications of the sale of property below circle rate.

Can I Sell My Property Below Circle Rate?

1. Circle Rate (Stamp Duty Value):

• The

  circle rate

  , also known as the

  stamp duty value

  , is the minimum valuation set by the state government for a property.

• It serves as the basis for calculating

  stamp duty

  during property transactions.

1. Tax Treatment for Selling Below Circle Rate:

If a property is sold below the circle rate, the following tax implications apply:

: 

• In the hands of the seller, the circle rate is deemed to be the sale price for capital gains tax purposes.

• Even if the actual sale price is lower, capital gains tax is levied assuming the property was sold at the circle rate.

• The seller can claim that the fair market value is genuinely lower than the circle rate.

• If the valuation officer determines a lower value, that value is considered the sale price.

• However, the sale price cannot be increased through this process.

: As a result of recent amendments, double taxation applies.

• Not only is the sale price increased in the hands of the seller, but tax is also levied on the buyer.

• This creates a scenario of double taxation.

I hope this helps!

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