What is Section 43CA?

According to section 43CA of income tax act, if the amount received in exchange for an asset (such as a building or land) is less than the amount subject to stamp duty, the difference will be taxed as considered income. However, no addition is possible if the difference between the two values is less than 10%.

What is section 43CA?

Section 43CA uses the value set by the Stamp Valuation Authority (SVA) on which stamp duty is payable in accordance with State Government regulations to ascertain the undervaluation of land or building, if any, in the sale agreement.

If the sale consideration actually received or claimed to have been received by the seller on the sale of the building, the land, or both are less than the SVA-adopted value, the SVA-adopted value will be taken into account as the real sales price paid or accruing to the seller. In order to calculate the taxable profits/gain resulting from such a transfer, the stamp duty value would be taken into account.

Transactions involving the transfer of immovable property that is not covered by Section 50C must comply with Section 43CA. In cases when the selling consideration is less than the stamp duty value, Section 50C of the Income Tax Act is applicable.

In some circumstances, Section 43CA is not applicable. For instance, the provisions of section 43CA will not apply if the transfer is done to a government authority or to any other specified entity. Similarly, the provisions of Section 43CA will not be applicable if the transfer is done as part of an amalgamation or demerger plan.

If the value of the property = Rs.1,00,000,

the stamp duty value of such a property = Rs. 1,08,000 (i.e. Within the limit of Rs.1,10,000), 

then for the purpose of section 43CA, the full value of consideration can be taken as Rs.1,00,000.

However, if the stamp duty value of a property = Rs.1,12,000, 

then for the purpose of Full Value of Consideration, the stamp duty value of Rs. 1,12,000 has to be taken because it is not within the prescribed limit of 10%.

I’d like to conclude my answer here about section 43CA of income tax act. I hope this helps:)

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