Purchase of rural agricultural land below stamp duty value is not liable for notional taxation  


Query 1]

  1. I am a senior citizen and having pension and bank interest as income to
    meet our needs which is not enough. I am in tax bracket of 20%. My son is
    in job in a different city and he wishes to gift a lump sum, say Rs. 25,00,000/ so that we may put it in any monthly income scheme for longer period and utilize the interest for our need. My question: Is there any tax implication from our end or our son? Please suggest me what is the better way to take/gift this amount. [
    Sib Sankar- shubho1981e@gmail.com]
  2. My mother is having a plot which she wants to gift to my son. Is it taxable? My son is 9 years old & not having PAN card. [sanjeev korba- korbasanjeev@gmail.com]


  1. Any sum of money received by any individual from any person or persons without consideration shall be taxable in the hands of recipient if the aggregate of such amount exceeds Rs. 50,000/-. An exception is provided if the amount is received in the following cases:
  2. from a “Relative” [Relative means (i) spouse (ii) brother or sister (iii) brother or sister of the spouse (iv) brother or sister of either of the parents (v) any lineal ascendant or descendant (vi) any lineal ascendant or descendant of the spouse (vii) spouse of the person referred to in clauses (ii) to (vi).]
  3. On the occasion of the marriage of an Individual
  4. Under a will or by way of inheritance
  5. In contemplation of death of the payer.

First query:
You would be receiving the gift from your son. It would not carry any tax implications. Subsequent income from the gifted amount would be taxable as your income alone and would not be subject to the clubbing provision in the hands of your son.

Second query:

Gift of a plot by your mother to her grandson (9 year old & not having PAN) is not taxable. It would be tax free as the recipient is receiving it from the relative as specified in section 56(2)(vii) of the Income Tax Act-1961. Income arising from the gifted plot (till he attains the age of 18 years) would be subject to clubbing provision in the hands of the parent.

Query 3]

I have read in earlier issues of Tax Talk that if the property is purchased below the ready reckoner value, then the difference would be taxable in the hands of the purchaser. Any exception like few defects in title, immediate payment situation, etc? Whether it will be taxable even if the purchase is of agricultural land also? [KLS- san*****@gmail.com]


a] In normal course, income-tax is payable on real income only. But there are provisions in income tax Act whereby citizens are required to pay the tax without actual income also. One such instance is purchasing the property below stamp duty valuation.

b]) Section 56(2): If any individual/HUF purchases any immoveable property for an inadequate consideration (i.e., if the stamp duty valuation of the property is more than the actual purchase price) and the difference between stamp duty valuation and actual purchase price is more than Rs.50,000/-, then such difference shall be taxable in the hands of the individual or HUF as “Income from Other Source”. For this purpose, stamp duty valuation as on the date of agreement to sale could be considered if any part of the consideration is paid by the purchaser otherwise than in cash.
c] Amount would be taxable irrespective of the fact that the transaction is genuine, or the purchase was due to few defects in the property or it was a distress sale on the part of the seller etc.

d] Difference is taxable only in respect of purchase of any immoveable property which is a “capital assets” under the Income Tax Act. It may be noted that rural agricultural land is not recognized as “Capital Assets” under the Income Tax Act-1961 and hence difference in purchase of rural agricultural land would not be subject to notional taxation as mentioned above.
An agricultural land is considered as rural agricultural land only if it is not situated in any area within the distance (measured aerially) of not more than:
a] 2 Kms, from the local limits of any municipality or cantonment board and which has a population of more than 10,000 but not exceeding 1,00,000; or
b] 6 Kms, from the local limits of any municipality or cantonment board and which has a population of more than 1,00,000 but not exceeding 10,00,000; or
c] 8 Kms, from the local limits of any municipality or cantonment board and which has a population of more than 10,00,000.

Query 3]

In my IT returns for AY 2016-17, I had submitted income from other sources corresponding to bank interest and paid tax accordingly i.e., tax corresponding to excess of Rs. 10,000/- interest and 30% tax as per my slab. I paid the same in challan No. 282, with major head 024 (interest tax) and minor head 300 (Self Assessment). But, I have received intimation from income tax mentioning outstanding demand of the same amount (as paid by me) and asking me to pay in challan No-280, with major head 021 (income tax , other than companies) and minor head 400 (tax on regular assessment). Shall I pay as per IT demand? If yes then what about the amount already paid? Please guide me in the above matter as how to respond to the IT query. [Nilay A. Mahajan- nilay_am@rediffmail.com]


One has to be very careful while making the tax payment to the Government Treasury as payment in wrong challan or with wrong assessment year or with details often results in unwanted demands & notices. Various Challan normally available for payment are as under:

  1. Challan No. ITNS 280: This single page Challan is for payment of Income tax, Corporation tax and Wealth tax.
  2. Challan No. ITNS 281: This single page Challan is for depositing Tax Deducted at Source from corporates or non-corporates.
  3. Challan No. ITNS 282: This single page Challan is for payment of Gift-tax, Estate Duty, Expenditure Tax and Other miscellaneous direct taxes.
  4. Challan No. ITNS 285: This single page Challan is for payment of newly introduced Equalization levy.
  5. Challan No. ITNS 286: This single page Challan is for payment of tax of recently limited period newly launched Income Declaration Scheme.
  6. Form 26QB: It is Return cum Challan form for payment of TDS on sale of immoveable property.

To deposit Advance Tax, Self Assessment tax and Regular Assessment Tax, an individual has to use challan ITNS-280. It can be paid both through internet (online or e-payment) and at designated branches of banks empanelled with the Income Tax Department (offline). To avail of the facility of online payment, taxpayer is required to have a net-banking account with any of the Authorized Banks. In your case, you should have paid the income tax in Challan No. 280 and not in Challan No. 282. You need not pay the demand raised but you have to ensure the required correction in the challan form. To rectify the mistakes, you are requested to write to your assessing Officer with the facts of the case with a request to transfer the amount as your advance tax or self assessment tax in the relevant year. You are also advised to respond to the outstanding demand by logging in at www.incometaxindiaefiling.gov.in as disagree with the demand with above explanation in the remarks column.

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