Special provision for full value of consideration in certain cases
[Section-78 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
Section 78(1) of Income Tax Act 2025
78(1) If the consideration received or accruing from the transfer of a capital asset, being land or building or both, is less than the stamp duty value, then, for the purposes of section 72, the stamp duty value shall be deemed to be the full value of the consideration received or accruing as a result of such transfer, subject to the following:––
- (a) the stamp duty value on the date of agreement may be taken as the full value of consideration, if––
- (i) the date of the agreement fixing the consideration and the date of registration for the transfer of the capital asset are not the same; and
- (ii) part or full consideration is received on or before the date of the agreement by an account payee cheque or account payee bank draft or electronic clearing system through a bank account or any other electronic mode, as prescribed;
- (b) if the stamp duty value does not exceed 110% of the consideration received or accruing, such consideration shall be deemed to be the full value of the consideration for section 72.
Section 78(2) of Income Tax Act 2025
78(2) Without prejudice to the provisions of sub-section (1), the Assessing Officer may refer the valuation of the capital asset to a Valuation Officer, and the provisions of sections 269(3) to (8), shall, with necessary modifications, apply in relation to such reference, where––
- (a) the assessee claims that the stamp duty value exceeds the fair market value of the property as on the date of transfer; and
- (b) the stamp duty value has not been disputed in any appeal or revision or no reference has been made before any other authority, court or the High Court.
Section 78(3) of Income Tax Act 2025
78(3) In this section, “assessable” means the value which any authority of the Government would have adopted or assessed as if it were referred to such authority for the purposes of payment of stamp duty, regardless of anything to the contrary contained in any other law in force.
Section 78(4) of Income Tax Act 2025
78(4) If the value determined by the Valuation Officer on a reference made under sub-section (2) exceeds the stamp duty value, such stamp duty value shall be taken as the full value of consideration.
FAQs on Section 78 of Income Tax Act 2025
1. What is the special provision under Section 78(1) of the Income Tax Act, 2025 regarding the full value of consideration?
Section 78(1) provides that if the consideration received or accruing from the transfer of a capital asset, being land or building or both, is less than the stamp duty value, then for the purposes of section 72, the stamp duty value shall be deemed to be the full value of consideration received or accruing.
2. Can the stamp duty value as on the date of agreement be considered instead of the registration date?
Yes, if the date of the agreement fixing the consideration and the date of registration are not the same, and the consideration or part thereof has been received through specified modes (account payee cheque, account payee draft, electronic clearing system, or any prescribed electronic mode) on or before the date of the agreement, then the stamp duty value as on the date of agreement can be considered as the full value of consideration.
3. What happens if the stamp duty value is only slightly higher than the actual consideration?
If the stamp duty value does not exceed 110% of the consideration received or accruing, the actual consideration shall be deemed to be the full value of the consideration for the purposes of section 72.
4. What modes of payment are acceptable for availing the benefit of stamp duty value as on the date of agreement?
The acceptable modes include payment through account payee cheque, account payee bank draft, electronic clearing system through a bank account, or any other electronic mode as may be prescribed.
5. Under what circumstances can the Assessing Officer refer the valuation to a Valuation Officer under Section 78(2)?
The Assessing Officer can refer the valuation to a Valuation Officer if the assessee claims that the stamp duty value exceeds the fair market value of the property on the date of transfer, and provided that the stamp duty value has not been disputed in any appeal, revision, or reference before any other authority, court, or the High Court.
6. What provisions apply to the valuation process when referred to a Valuation Officer?
The provisions of sections 269(3) to 269(8) of the Act, with necessary modifications, shall apply to such valuation references made by the Assessing Officer.
7. If the Valuation Officer determines a higher value than the stamp duty value, what value will be considered?
If the Valuation Officer’s determined value exceeds the stamp duty value, then the stamp duty value itself shall be taken as the full value of consideration, not the higher value determined.
8. What is the meaning of the term “assessable” under Section 78(3)?
“Assessable” means the value which any government authority would have adopted or assessed for the purpose of stamp duty payment, irrespective of anything stated differently in any other law currently in force.
9. Is it mandatory for the assessee to accept the stamp duty value if he disputes it?
No, the assessee has the right to claim that the stamp duty value exceeds the fair market value. In such a case, the Assessing Officer may refer the matter to a Valuation Officer for determination.
10. Does Section 78 override any other law related to stamp duty valuation?
Yes, the definition of “assessable” and the provisions of Section 78 apply notwithstanding anything to the contrary contained in any other law in force.
11. Can the assessee contest the Valuation Officer’s valuation in appeal?
Yes, after the assessment order based on the Valuation Officer’s valuation, the assessee can contest it in appeal as per the usual rights available under the Act.
12. What is the objective of deeming the stamp duty value as full value of consideration?
The objective is to curb under-reporting of consideration in property transactions and to ensure proper taxation of capital gains arising from such transfers.
13. Does Section 78 apply only to land and building transactions?
Yes, Section 78 specifically applies to transfers involving capital assets in the nature of land, building, or both.
14. What happens if part payment was made in cash before the agreement date?
The benefit of taking stamp duty value on the date of agreement is available only if the payment is made through account payee cheque, account payee draft, ECS, or other prescribed electronic modes. Cash payment would not qualify for this benefit.
15. Is there any threshold limit for deviation between actual consideration and stamp duty value for invoking Section 78?
Yes, a deviation up to 10% (i.e., stamp duty value not exceeding 110% of actual consideration) is allowed. Beyond this threshold, the stamp duty value will be deemed as the full value of consideration.
Refresh Page