s.50C — Stamp duty value as full value of consideration for land or building
Where land or a building held as a capital asset is transferred for less than its stamp duty value, the stamp duty value is deemed to be the full value of consideration, subject, from assessment year 2021-22, to a ten per cent tolerance.
The agreement-date provisos apply from assessment year 2017-18 (Finance Act, 2016). The tolerance was inserted by the Finance Act, 2018 at five per cent from assessment year 2019-20 and raised to ten per cent by the Finance Act, 2020 from assessment year 2021-22; before assessment year 2019-20 there was none. The counterpart in the Income-tax Act, 2025 is section 78.
Income-tax Act, 1961
s.50C
Income-tax Act, 2025
s.78
In force from 1 April 2026, but s.536(2)(c) preserves the 1961 Act for tax years beginning before that date.
In short
Section 50C(1) of the Income-tax Act, 1961 provides that where the consideration received or accruing on the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted, assessed or assessable by a State Government authority for stamp duty in respect of that transfer, that value is deemed to be the full value of consideration for section 48. The first proviso allows the stamp duty value on the date of the agreement fixing the consideration to be taken where the agreement and registration dates differ, and the second proviso confines that to cases where the consideration or a part of it was received by account payee cheque or draft, electronic clearing system or another prescribed electronic mode on or before the date of the agreement; rule 6ABBA prescribes the other modes. These two provisos apply from assessment year 2017-18, and the reference to other prescribed electronic modes from assessment year 2020-21. The third proviso disapplies the section where the stamp duty value does not exceed one hundred and ten per cent of the consideration; it was inserted at one hundred and five per cent from assessment year 2019-20 and raised to one hundred and ten per cent from assessment year 2021-22. Sub-section (2) allows the Assessing Officer to refer the valuation to a Valuation Officer where the assessee claims that the stamp duty value exceeds fair market value and that value has not been disputed in appeal, revision or reference, and sub-section (3) caps the result at the stamp duty value. Explanation 2 defines assessable as the value the stamp authority would have adopted on a reference. The section applies only to a capital asset that is land or building or both: stock in trade falls under section 43CA, the buyer under section 56(2)(x), and a consideration that cannot be ascertained under section 50D, which substitutes fair market value. The counterpart in the Income-tax Act, 2025 is section 78, with the agreement date rule and the tolerance in clauses (a) and (b) of sub-section (1), the banking condition expressed as a specified banking or online mode defined in section 66(32), and the Valuation Officer reference in sub-sections (2) and (3).
What the provision does
Replaces a stated price with the stamp duty value where land or a building held as a capital asset is transferred below it, with a tolerance (ten per cent from assessment year 2021-22, five per cent for 2019-20 and 2020-21, none before), an agreement date rule tied to payment through the banking channel from assessment year 2017-18, and a Valuation Officer reference capped at the stamp duty value. It does not reach a right that is not itself land or building, which the Ahmedabad Tribunal has held a booking right in a flat under construction to be, though no High Court has decided the point, and it does not value consideration received in kind.
Threshold questions
- Is the asset transferred land or building or both, as distinct from a booking right, development rights or rights under an agreement to sell
- Is there a stamp duty value in respect of that transfer, rather than of some other instrument such as the agreement for the new flat
- Does the stamp duty value exceed the consideration by more than the tolerance in force for the year (ten per cent from assessment year 2021-22, five per cent for 2019-20 and 2020-21, none before)
- Was any part of the consideration received through the banking channel on or before the date of the agreement, which opens the agreement date value
- Did the assessee object before the Assessing Officer that the stamp duty value exceeds fair market value, and ask for a reference to the Valuation Officer
- Is the asset held as stock in trade, which takes the case to section 43CA instead
In practice
The recurring disputes.
Booking rights and rights in a flat under construction
The Ahmedabad Tribunal held in Yasin Moosa Godil (April 2012) that a deeming provision cannot go beyond the situation it describes, and that a person who relinquished his booking in an under-construction flat transferred booking rights, not land or building, so section 50C could not apply. The Revenue's appeal to the Gujarat High Court was admitted on that very question and then disposed of as not pressed on 10 February 2016, the tax effect being below the monetary limit in the Board's circular of 10 December 2015, so there is no High Court ruling. The Ahmedabad Tribunal applied the same reasoning to banakhat rights in Devindraben I. Barot and Shyama Prakash Agarwal (2016), and the Delhi Tribunal to rights in under-construction flats in Sushma Bajaj (February 2025). The Revenue's best point, recorded in Yasin Moosa Godil, is that an allottee who has paid more than nine-tenths of the price holds the flat in substance. At Tribunal level the booking-right line is consistent, but every case in it concerned a booking or banakhat right, not a member's registered entitlement given for his own demolished flat. The Revenue will say the member is in a stronger version of the position rejected in Yasin Moosa Godil, since he held the land and building before the redevelopment and holds a registered right to a specific flat, and will add Arlette Rodrigues and Chiranjeev Lal Khanna. For a member who assigns his entitlement before the new flat is built it is the best answer available, not a settled one.
Development rights and a transfer on demolition
In Arlette Rodrigues (February 2011) the Mumbai Tribunal held that a transfer of development rights is a relinquishment within section 2(47)(i) and that section 50C applies to it, and in Chiranjeev Lal Khanna (April 2011) it applied the section where owners handed land and building to a developer for demolition and redevelopment against cash and retained area. Other Mumbai benches have held that development rights are not land or building: MIG CHS Group II (February 2017), for a society that was only a lessee, and SBI Staff Vaibhav CHS (June 2019), which said the section does not reach rights in a development agreement. The line that reconciles them is whether land and building actually pass to the developer. Neither side has a High Court ruling, and an owner of a bungalow or plot who takes cash under a registered development agreement should expect the Revenue to rely on Chiranjeev Lal Khanna.
A member who exits for cash instead of a flat
No order was traced in which a society member who took cash in lieu of a new flat had section 50C applied. The Revenue's argument is that he transfers his flat, a building with an interest in the land, so the stamp duty value of the instrument by which he exits replaces his price. His answer is that he relinquishes membership and occupancy rights, or his entitlement under the redevelopment, which are not land or building, and that there is often no stamp valuation in respect of that transfer at all, the redevelopment documents being stamped on the new flats rather than on the surrender of his old one. Where the old flat is conveyed by a registered deed to the developer or to an incoming member, the deed carries its own valuation and the section is hard to resist. Whether part of a buy-out price can be carved out as hardship compensation outside the consideration has not been decided either way.
The reference to the Valuation Officer
Sub-section (2) says the Assessing Officer may refer the valuation, which the Revenue reads as a discretion. The Mumbai Tribunal in Arlette Rodrigues held that where the assessee had objected to the stamp duty value before the Assessing Officer, he should have made the reference, and restored the matter for one. The Delhi Tribunal in Sushma Bajaj added that a Valuation Officer's figure is not the measure under section 50C, which uses only the stamp valuation authority's value. Since sub-section (3) caps the outcome at the stamp duty value, a reference can only help the assessee. The practical rule is to object in writing at the assessment stage and ask for the reference; a member who stays silent there loses the footing on which Arlette Rodrigues was remanded.