The “Full Value of Consideration” (FVC) is the total amount received or receivable when a capital asset is transferred. It is crucial for calculating capital gains tax under Section 48 of the Income Tax Act, 1961.
1. What is Included in Full Value of Consideration?
| COMPONENT | DESCRIPTION | EXAMPLE |
| Sale Price | Actual amount received from the buyer | ₹50L for a property |
| Advance Received | Earnest money or booking amount | ₹5L advance before registration |
| Compensation | Amount received for compulsory acquisition | ₹30L from government for land acquisition |
| Fair Market Value (FMV) | Deemed value if sale is undervalued (Section 50C) | Stamp duty value used if sale price is lower |
| Non-Monetary Consideration | Value of assets/services received in exchange | Shares worth ₹20L received for land transfer |
| Debt Assumption | Liability taken over by buyer | Buyer pays ₹10L home loan on behalf of seller |
2. Special Valuation Rules
A. Section 50C – Immovable Property
- If the sale price < stamp duty value (SDV), the higher value (SDV) is consideredas FVC.
- Exception: If SDV exceeds sale price by ≤ 10%, sale price is accepted.
Example:
- Sale Price: ₹80L
- Stamp Duty Value: ₹90L
- Taxable FVC: ₹90L (since difference > 10%)
B. Section 50D – Unascertainable Consideration
- If consideration cannot be determined, FMV is taken as FVC.
- Applies to barter transactions, swaps, or deferred payments.
C. Section 56(2)(x) – Undervalued Gifts
- If an asset is received for inadequate consideration, FMV is considered for tax.
3. Exclusions from FVC
- Brokerage/Commission(deductible under Section 48)
- Unrealized Gains(if payment is deferred)
- Personal Gifts(if genuine and not a disguised sale)
4. Practical Example
Scenario: Mr. X sells a property:
- Agreement Value: ₹1.2 Cr
- Stamp Duty Value: ₹1.35 Cr
- Advance Received: ₹10L
- Buyer Takes Over Loan: ₹20L
FVC Calculation:
- Higher of sale price (₹1.2Cr) or SDV (₹1.35Cr) → ₹1.35Cr
- Add: Debt assumption (₹20L) → Total FVC = ₹1.55Cr
Taxable Capital Gain:
FVC (₹1.55Cr) – (Indexed COA + Improvement Cost + Transfer Expenses)
