Section 78
Section 78: special provision for full value of consideration in certain cases
Section 78 addresses under-valued property sales for capital gains purposes - when land or a building is sold for less than its stamp duty valuation, the stamp duty value is generally used as the deemed sale consideration instead of the actual price. It is the successor to Section 50C of the old Act, and it includes a safe-harbour tolerance band and a dispute-resolution route through a Valuation Officer.
This explanation is AI-assisted and pending review by our CA/CS team. It is general information, not professional advice - always cross-check against the bare law text above or talk to our tax team for guidance specific to your situation.
The core rule
Section 78(1) provides that if the consideration received or accruing from transfer of land or building (or both) is less than the stamp duty value, the stamp duty value is deemed to be the full value of consideration for purposes of Section 72, subject to two qualifications:
- If the date of the agreement fixing the consideration is different from the date of registration of the transfer, and part or full consideration was received on or before the agreement date through a "specified banking or online mode" (as defined in Section 66(32)), the stamp duty value as on the agreement date may be used instead of the value on the registration date.
- If the stamp duty value does not exceed 110% of the actual consideration received, the actual consideration is treated as the full value of consideration (i.e. the deeming rule does not kick in within this 10% tolerance band).
Disputing the stamp duty value
Section 78(2) allows the Assessing Officer to refer the valuation to a Valuation Officer (applying Section 269(3) to (8) with necessary modifications), where the assessee claims the stamp duty value exceeds the property's fair market value as on the transfer date, and that stamp duty value has not been disputed in any appeal, revision or other proceeding.
Section 78(3) provides that if the Valuation Officer's determined value exceeds the stamp duty value, the stamp duty value (not the higher valuation) is taken as the full value of consideration.
Frequently asked questions
What happens if I sell property for less than its stamp duty value?
The stamp duty value is generally treated as the sale consideration for capital gains purposes under Section 78(1), unless it does not exceed 110% of the actual consideration received, in which case the actual consideration is used.
Can I use the stamp duty value as of the agreement date instead of the registration date?
Yes, if the agreement date and registration date differ and at least part of the consideration was received on or before the agreement date through a specified banking or online mode, per Section 78(1)(a).
What if I believe the stamp duty value is higher than the actual fair market value?
You can ask the Assessing Officer to refer the valuation to a Valuation Officer under Section 78(2), and if the Valuation Officer's figure exceeds the stamp duty value, the stamp duty value (the lower figure) is still used, per Section 78(3).
Related sections
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Get expert help on property sale capital gainsLast updated 9 September 2026