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I am selling a plot of land in Chennai. The buyer agreed to a sale price of 75 lakhs, with 50 lakhs to be paid via the registrar. The buyer has agreed to pay an additional 25 lakhs by cheque (bank transfer) for land development and maintenance expenses. I plan to invest the 50 lakhs in Capital Gain Bonds (54EC under NHAI or REC, etc.) and pay taxes on the remaining 25 lakhs. My questions are: Since I don’t have maintenance receipts for the past years, can I accept the full amount from the buyer and claim zero expenses, then pay taxes on the entire 25 lakhs in my income tax filing? Is there a document that the buyer and seller should sign to acknowledge the additional 25 lakhs for land development and maintenance? If so, what details should be included?
For the 25 lakhs, it's advisable to document the payment in a formal agreement between both parties. You don’t need receipts for maintenance, but a clear acknowledgment from the buyer about the additional payment for land development would be beneficial. Consult a tax consultant to ensure correct tax filings on the 25 lakhs. For further legal assistance contact us on our helpline number.