Sale below circle rate tax calculator (section 78, old 50C)

What is meant by stamp duty value of property?

Stamp duty value is the value a state's stamp authority adopts or assesses for charging stamp duty on a property, usually the circle rate for the area multiplied by the area. States call the rate different names: circle rate in Delhi and Uttar Pradesh, collector rate in Punjab and Haryana, ready reckoner in Maharashtra, guidance value in Karnataka, guideline value in Tamil Nadu, DLC rate in Rajasthan and jantri in Gujarat.

Stamp duty is charged on the higher of this value and the price in the deed. Income tax law then uses the same figure as a floor: the Income-tax Act, 2025 defines stamp duty value as the value adopted, assessed or assessable by the state for stamp duty.

What is the 110% rule in section 50C (now section 78)?

Under section 78 of the Income-tax Act, 2025, which replaced section 50C of the 1961 Act from 1 April 2026, if a capital asset that is land or a building is sold for less than its stamp duty value, the stamp duty value is treated as the sale price for capital gains. But if the stamp duty value does not exceed 110% of the price, the actual price is used.

Once the stamp value goes over 110%, the whole stamp value is used, not just the excess. Example: price ₹80 lakh, stamp value ₹95 lakh. That is 118.75% of the price, so the seller is taxed as if they sold for ₹95 lakh. The extra ₹15 lakh of gain at 12.5% plus 4% cess is about ₹1,95,000 more tax. At ₹86,36,364 or more, the stamp value would have stayed within 110%.

If the price was fixed by an agreement before registration and part or all of it was received by account-payee cheque, bank draft or electronic bank transfer on or before that date, the stamp value on the agreement date can be used instead.

Is the buyer taxed when buying property below circle rate?

Yes, if the gap is large. Under section 92(2)(m) of the 2025 Act (formerly section 56(2)(x)), when the stamp duty value exceeds the price by more than the higher of ₹50,000 and 10% of the price, the whole difference is taxed as the buyer's income from other sources, at the buyer's slab rate.

In the example above, the ₹15 lakh shortfall is more than ₹8 lakh (10% of ₹80 lakh), so the buyer adds ₹15 lakh to their income. The taxed value then becomes the buyer's cost when they sell later. Property received from a relative, under a will or by inheritance is outside this rule.

What if the circle rate is higher than the real market value?

You can dispute it. If you claim that the stamp duty value is more than the fair market value on the date of transfer, and you have not already disputed it in an appeal or revision elsewhere, the Assessing Officer may refer the valuation to a Valuation Officer under section 78(2). If the Valuation Officer's value is lower, it is used; if it is higher, the stamp duty value stays.

Buyers have the same route under section 92(4)(b). Keep evidence ready: a registered valuer's report, recent sale deeds of similar land nearby, and anything that lowers the value, such as no road access, a dispute or encroachment.

Does the rule apply to agricultural land?

Not to rural agricultural land. It is not a capital asset for income tax, so its sale is not taxed as capital gains and section 78 does not apply, and the buyer-side rule, which covers land that is a capital asset, generally does not apply either. Agricultural land inside or near municipal limits can be a capital asset, so check where your land falls first.

Stamp duty is a separate matter: the buyer still pays it on the higher of the price and the circle rate value, whatever the land type.