DELETION OF SECTION 56(2)(vii)(b)(ii)

The existing provisions of section 56(2)(vii)(b)(ii) provide that where any immovable property is received for a consideration which is less than the stamp duty value of the property by an amount exceeding 50,000, the stamp duty value of such property as exceeds such consideration, shall be chargeable to tax in the hands of the individual or HUF as income from other sources. This provision works on the assumption that the buyer of the property would have paid consideration more than the stated consideration. This presumption is not in accordance with judicial interpretation and therefore deserves to be deleted.

Hence, it is proposed that section 56(2)(vii)(b)(ii) be deleted w.e.f. 1.4.2017.

Source- ​Draft Report of Justice R.V. Easwar (Retd) Committee to Simplify the provisions of Income-tax Act, 1961

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Tags : Gift (93) section 56 (125)

3 responses to “No Addition U/s. 56 for Immovable Property received at less than stamp duty value”


    we have purchased property in 2015, agreement made of Rs.1000000/- but government value is 1100000/-of this property & we have paid stamp duty on Rs. 1100000/- as property is in under construction & A.I.R. of income tax notice ti is shown , Now how can we reply to Department for the show cause of u/s.56(2) (vii)b

  2. H.C.Jain says:

    If an old couple having no legal heir sells their house at half of stamp value under condition that the buyer shall get possession only after death of both of them. Please clarify implications in this case for buyer and seller. The couple is aged 80-86 years.

  3. Sundar Subham says:

    The assumption put forth by the Hon’ble Committee member seems to be wrong. Infact, it is other way hwereby buyer pays less consideration than the stamp duty value and hence such benefit exceeding INR 50,000 is taxable. This is an anti tax avoidance provision to discourage transfer of immovable property less than the stamp duty value. However, there is double taxation on both buyer and seller due to implication of Section 50C of the Act. Hence, the section 56(20)(vii)(b)(i) and 56(20)(vii)(b)(ii) both may be deleted due to this reason.

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