Hey freinds..
We always feel that taxes eat out most of the share of our hard earned income and we all look for ideas to save taxes. We try to ensure better tax planning so as to shell out as little as possible from our kitty in favour of the taxmen. So here is a small and simple idea on how to manage property taxes.
Step 1- Form a company and purchase the property in the name of the company.
Step 2- After one year if you wants to sell the property, simply transfer the shares in the company to the buyer (The buyer becomes the owner of the compnany and its property)
Benefits of such a transaction
1.- The transaction of sale of property (through the company) is subjected to Long Term Capital Gains (LTCG) in a period of one year instead of the 3 years as sale of shares are subjected to LTCG in a period of 1 year instead of 3 years.
2.- Since there is no sale/purchase of property the liabilty of stamp duty does not arise (This can save a lot of money and give a
bargaining power to the seller)
3.- Section 50C is not attracted
4.-Through this deal stamp duty anf Income tax can be saved within the law.
Freinds if you all have such ideas to manage taxes lets share them on this platform so that we all can benifit from it. So continue with as many posts as possible and as many replies.
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A little piece of information on the idea shared by Madhur on tax “planning”….
This procedure to ‘save’ tax has been adopted by many Co.s and is very popular.
The Department (our very own Income Tax Deptt) takes this ‘planning’ as tax “avoidance” and has booked a no. of Co.s for the same.(The Deptt. pertaining to the Stamp Duty might also get involved)
The case was also reported in newspapers last year when a builder was booked to carry out similar transactions for a no. of properties held at Gurgaon.
Im not aware of the outcome of the cases, and won’t be able to search as well.
But there has been litigations relating to this issue…