Full value of consideration for transfer of assets other than capital assets in certain cases
[As per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
Section 53(1) of Income Tax Act 2025
53(1) In case of transfer of an asset (other than a capital asset), being land or building or both, if the consideration received or accrued from such transfer is less than the stamp duty, then such stamp duty value for computing profits and gains from transfer of such asset shall be deemed to be the full value of consideration.
Section 53(2) of Income Tax Act 2025
53(2) The provisions of sub-section (1) shall not apply if the stamp duty value does not exceed 110% of the consideration received or accrued and in such a case, the consideration received or accrued shall be deemed to be the full value of consideration.
Section 53(3) of Income Tax Act 2025
53(3) If the date of agreement fixing the value of consideration for transfer of asset and date of registration for transfer of such asset are different, then the stamp duty value as on date of agreement may be taken to be the full value of consideration under sub-section (1).
Section 53(4) of Income Tax Act 2025
53(4) The provisions of sub-section (3) shall apply only in a case where the amount of consideration or a part thereof has been received by specified banking or online mode on or before the date of agreement for transfer of such asset.
Section 53(5) of Income Tax Act 2025
53(5) For the determination of the value adopted or assessed or assessable under sub-section (1), the provisions of section 78(2) and (4) shall apply.
FAQs on Section 53 of Income Tax Act 2025
1. What is the scope of Section 53 of the Income Tax Act, 2025?
Section 53 applies to the transfer of assets (other than capital assets) being land or building or both, for computing profits and gains from such transfer under the head “Profits and Gains of Business or Profession”.
2. When is the stamp duty value deemed to be the full value of consideration under Section 53(1)?
If the consideration received or accrued is less than the stamp duty value, then the stamp duty value shall be deemed to be the full value of consideration for computing income from such transfer.
3. Does Section 53 apply to capital assets?
No. Section 53 applies only to assets other than capital assets, specifically when such assets are land or building or both.
4. Is there any tolerance limit for variation between the stamp duty value and actual consideration?
Yes. As per Section 53(2), if the stamp duty value does not exceed 110% of the consideration received or accrued, then the actual consideration shall be treated as the full value of consideration.
5. Can the stamp duty value as on the date of agreement be considered instead of the date of registration?
Yes. Under Section 53(3), if the date of agreement and date of registration are different, the stamp duty value on the date of agreement may be taken as the full value of consideration.
6. What is the condition for applying stamp duty value as on the date of agreement under Section 53(4)?
This option is available only if consideration or part of it has been received by specified banking channels (such as account payee cheque, draft, electronic clearing system, or prescribed electronic modes) on or before the date of agreement.
7. What happens if no part of the consideration is received on or before the date of agreement?
In such a case, the benefit of considering the stamp duty value on the date of agreement under Section 53(3) will not be available.
8. What modes of payment are considered valid under Section 53(4)?
The following are valid modes:
- Account payee cheque or draft
- Electronic clearing system through a bank account
- Other prescribed electronic modes (as notified)
9. Does Section 53 apply when the asset transferred is not land or building?
No. Section 53 is applicable only when the asset transferred is land or building or both, and such asset is not a capital asset.
10. How is the stamp duty value determined under Section 53(1)?
As per Section 53(5), the provisions of Section 78(2) and (4) are applicable for determining the value adopted, assessed, or assessable by any authority of the government (e.g., Stamp Valuation Authority).
11. What if the consideration is exactly equal to 110% of the stamp duty value?
If the stamp duty value equals or is less than 110% of the consideration, then actual consideration shall be taken as full value. If it exceeds 110%, then stamp duty value becomes full value.
12. How does Section 53 relate to Section 78?
Section 53(5) makes it clear that to determine the adopted or assessable value under Section 53(1), one must apply Section 78(2) and 78(4), which lay down rules for determining fair value or referring to a valuation officer.
13. Can the assessee challenge the stamp duty valuation?
Yes. As per Section 78(2), if the assessee claims that the stamp duty value exceeds the fair market value, the Assessing Officer may refer the valuation to a Valuation Officer.
14. Does Section 53 affect computation under capital gains?
No. Section 53 applies only to the computation of profits and gains from business or profession, not to capital gains, which are governed by Section 43 of this Act.
15. Will Section 53 apply if the asset is stock-in-trade?
Yes. If land or building is held as stock-in-trade, and not as a capital asset, Section 53 will apply to determine the deemed full value of consideration.
16. What happens if both Section 53 and Section 78 are applicable to the same transaction?
In such a case, Section 53(5) mandates that the procedure under Section 78(2) and 78(4) must be followed to determine the stamp duty value for applying the provisions of Section 53(1).
Section 53 provides a deeming fiction for computing the full value of consideration in case of transfer of non-capital assets, specifically land or building or both, held as business assets. It ensures that undervaluation of consideration in such transfers does not lead to tax avoidance.
The key takeaway is that if the declared consideration is less than the stamp duty value, the stamp duty value may be deemed as the actual consideration unless the difference is within the permissible limit of 10%. Additionally, the Act offers relief where part of the payment is received via prescribed banking modes before the agreement date, allowing the use of stamp duty value as on the agreement date.
By linking the provision to the valuation mechanisms under Section 78, the Act provides a fair opportunity to taxpayers to contest inflated stamp duty values. Overall, Section 53 strengthens tax compliance in business transactions involving immovable property, while incorporating reasonable safeguards for genuine transactions.
