Furniture, fixtures can save you tax and stamp duty. But only if you do it right

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₹1.16 crore. However, the buyer proposed a tax-saving idea: make a separate agreement of ₹16 lakh for the furniture and fixtures. This strategy aimed to reduce the capital gains tax by declaring the property sale at ₹1 crore while selling the furniture separately and categorising them as personal effects, which are not taxable.

For the buyer, this meant stamp-duty savings on the ₹16 lakh portion. It seemed like a win-win until the NRI tried transferring the sale amount to his US bank account. When an NRI wants to remit money abroad, they must obtain certificate 15CB from a chartered accountant (CA) to prove the source of funds; it's similar to an audit.

When the NRI in question, who wished to remain anonymous, approached a CA, he was asked for invoices for the furniture and fixtures worth ₹16 lakh. He didn’t have any. “I am not aware of Indian laws and just trusted the buyer’s word.

He tricked me," the NRI said. Now, the NRI had two options: obtain the original invoices to prove the value of the furniture and fixtures, or recalculate their tax liability on ₹16 lakh and pay the remaining tax. The NRI’s predicament highlights the challenge of declaring furniture and fixtures as personal effects during a property sale.

Documentary proof is essential in case of scrutiny. Experts note that sellers often inflate the value of furniture and fixtures to save tax since supporting invoices are not requested at the time of sale or when filing the income tax return (ITR). “Since no authority actually goes to the site to check the furniture being sold, sellers quote obnoxious numbers.