The property deal is usually closed with the registration but in some cases, the deal is cancelled or called-off by a seller or by the buyer. The occurrence of this event after the deposition of the token amount needs to follow money refund. So, here in this blog post, we let you know everything about money refund after a property deal is cancelled.
- What is token money?
The token money is a small percent of the property value that is paid by the buyer to acquire that particular property. This amount varies according to the size and cost of the property.
- Token money and Tax Laws
There are two scenarios. In case, the seller revokes the decision to sell the same property after the receival of token money then the buyer can file a complaint against him/her in the court but nothing more can be done in this matter. However, not many buyers take this step.
But in case, the buyer cancel a property deal then the seller can forfeit the token money and here the buyer cannot file a case against the builder as this is believed as a capital loss under income tax benefit.
However, the seller can show token money as an income for the year in which the deal is called-off. He/She can show this income under the section ‘Income from other sources’ and not under the section ‘Capital Gains’.
Prior to the amendment of law in 2014, the forfeited amount was used to be deducted from the cost of acquisition of asset for the year in which the deal was cancelled.
Stamp Duty Refund
The stamp duty has to be paid for all property transactions and this can be a fixed amount or a percentage of the property’s market value. Apart from this, you are also required to pay registration charges for the agreement registration. Both the stamp duty and registration charges are fixed by the respective State Governments. Hence, the stamp duty refund rules differ from state to state.
In case, of buying an under-construction property, the Goods and Service Tax [GST] is imposed on the unit at a particular rate and the developer impose the same on the property. The GST charge depends upon two factors that firstly if the property falls under the affordable housing category and if the developer has availed the GST.
The seller can return the booking amount in installments in case the buyer decided to cancel the deal. However, the refund depends upon the demand and supply scenario at that home. The developer can also deprive you from the refund amount in case of depositing it in Government’s credit.