Sale of your flat in a family would attract taxes and duties

My brother wants to purchase my property at Thane and wants to avail a housing loan from a bank for such purchase. Will the sale attract capital gains tax? Do we have to take permission of the society for such family transaction? How do stamp duty and registration aspects apply to such a transaction? Will the bank grant a loan for such a transaction within the family?
 — Ganesh
You are contemplating a property transaction within the family but absolutely on commercial terms and therefore all the implications under the provisions of the Bombay Stamp Act, 1958, under the Registration Act, 1908 and under the Income Tax Act, 1961 would apply as they apply to such transactions between outsiders.

The stamp duty would be attracted on the sale value stated by you in the agreement for sale or on ready reckoner value, whichever is higher.  Although there is concession in respect of stamp duty on gift of an immovable property to a family member, there is no such concession on sale within the family. Registration charges would be attracted on value adopted and assessed or assessable for stamp duty purposes. 

For income-tax purposes, to compute capital gains in your hands, the gross value of consideration would be the value as stated in the agreement for sale or the stamp valuation adopted and assessed or assessable, whichever is higher. However, the society transfer premium would not be attracted as the transfer is to a family member.

All forms applicable to a transfer would have to be filled in. The requirement of obtaining a no objection or an approval for transfer of flat in a co-operative housing society has been dispensed with under the model bye laws. The bank or financial institution generally advances loans on evaluation of the proposal based on value of the property and repayment capacity of the borrower over the term of the loan sought.

If the bank or financial institution is convinced on such aspects, then simply because it is a case of transaction within the family should not disentitle your brother to avail the loan.

Is stamp duty payable on transfer of immovable property in a scheme of amalgamation of companies under a court order?
A scheme of amalgamation is approved by a competent court in terms of exercise of jurisdiction under the Companies Act, 1956. Under such a scheme, the property is conveyed from one company to another.

An order of the court approving such a scheme to the extent it provides for conveyance of an immovable property would be subject to stamp duty under section 3 of the Indian Stamp Act, 1899.  Statutory definition of the term “conveyance” u/s 2(10) of the Indian Stamp Act, 1899 is an inclusive definition of wide import.

The writer is a chartered accountant and can be reached at ghiatarun@rediffmail.com