Property · Valuation

Stamp duty value rule: when your sale price is not the price taxed

If you sell below the state's stamp duty (fair) value by more than 10%, the higher value is taxed as your sale price. How the rule works, with examples.

Short answer

If the agreed price is lower than the stamp duty value fixed by the state (the fair value in Kerala) and that value is more than 110% of the price, the stamp duty value is taken as your sale price for capital gains (earlier section 50C). Within the 10% band, your actual price is used. The buyer may also be taxed on the difference.

Last reviewed: · Reviewed by Regi Tom Antony, FCA · NRI property sale services

01

How the rule works

Capital gains are computed on the higher of the agreed price and the stamp duty value, unless the stamp duty value is within 110% of the agreed price. Where the agreement date and registration date differ and part of the price was paid by bank transfer on or before the agreement, the value on the agreement date can be used.

Agreed priceStamp duty valuePrice used for capital gains
Rs 80 lakhRs 86 lakh (107.5%)Rs 80 lakh: within the 10% band
Rs 80 lakhRs 95 lakh (118.75%)Rs 95 lakh: the stamp duty value
02

Why it matters to NRIs

A buyer who pushes for a lower registered price, or a cash component, can leave the seller taxed on a value never received. Agree the price with the stamp duty value in front of you, and use the NRI property TDS calculator with the higher figure.

03

If the value is too high

Where the stamp duty value is higher than the market value, for example because of the property's condition or location, you can ask for the valuation to be referred to a valuation officer during assessment. Keep a registered valuer's report and photographs.

04

The buyer's side

If the stamp duty value exceeds the price by more than 10%, the buyer can be taxed on the difference as income. Many buyers therefore resist under-valued deals, which is another reason to keep the registered price honest.

Common questions

Answered, candidly.

What is the 10% tolerance in the stamp duty value rule?
If the stamp duty value does not exceed 110% of the agreed price, the agreed price is used for capital gains. Above that, the stamp duty value is taken as the sale price.
Does the stamp duty value rule apply to NRIs?
Yes. It applies to any seller of land or building, resident or non-resident, when computing capital gains.
Can I challenge a stamp duty value that is higher than the market value?
Yes. During assessment you can ask for the value to be referred to a valuation officer; a registered valuer's report helps support your case.
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Important information

This guide is general information published by RTA & Associates. It is not tax, legal, financial or investment advice, and it does not create a client relationship. It does not take account of your personal circumstances, and you should not act or refrain from acting on the basis of anything here.

Cross-border outcomes turn on the specific facts — your day-counts, the timing of your move, the wrappers you hold and the treaty position between the two countries. A small change in any of those can change the answer completely.

References to the law, rules or practice of countries other than India are included for general orientation only. They are not advice on the law of that country, and they should be confirmed with a qualified adviser in that jurisdiction before you act.

Tax law, exchange-control rules and treaty positions change, and they change often. This page reflects our understanding as at the date shown above. We do not undertake to update it.

To the extent permitted by law, RTA & Associates and its partners and staff accept no liability for any loss arising from reliance on this page. For advice on your own position, book a consultation.

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