Many times, the value of an under-construction property changes between the time of signing the builder-buyer agreement and the time of sale deed registry. So, how does it affect buyers?
Buyers will have to pay the differential amount
Builder-buyer agreements mention that the buyers will be responsible for paying any additional expenses that the developer may have to incur during the construction. Therefore, reading the details of the builder-buyer agreement is extremely crucial.
Check this quick guide to choosing between a ready to move in and under construction property
Buyers will have to pay stamp duty
In case, the value of the property has increased on paper, stamp duty, etc., buyers will have to pay accordingly. So, if the stamp duty in your state is 5%, and you were supposed to pay 5% of Rs 50 lakh as stamp duty initially, you must pay 5% of Rs 70 lakh as stamp duty rates have increased by Rs 20 lakh. Under the same rule, increased prices will apply on the registration charges too.
Buyers not liable to pay any taxes
In many cases, income tax officers impose tax under ‘income from other sources’ if there was a change between the agreement value and registration value of a property. However, the buyer is not responsible to pay taxes on the differential amount, as established by an Income Tax Appellate Tribunal (ITAT) order. In the latest ruling, the Mumbai bench of ITAT has said that the differential amount between the flat purchase price on the date of allotment and the date of registration can’t be taxed and put on buyers.
