Home > Money > Question
Need Expert Advice?Our Gurus Can Help

Selling Flat Before Redevelopment & Booking New One: Tax Implications?

Mihir

Mihir Tanna  |1060 Answers  |Ask -

Tax Expert - Answered on Sep 21, 2024

Mihir Ashok Tanna, who works with a well-known chartered accountancy firm in Mumbai, has more than 15 years of experience in direct taxation.
He handles various kinds of matters related to direct tax such as PAN/ TAN application; compliance including ITR, TDS return filing; issuance/ filing of statutory forms like Form 15CB, Form 61A, etc; application u/s 10(46); application for condonation of delay; application for lower/ nil TDS certificate; transfer pricing and study report; advisory/ opinion on direct tax matters; handling various income-tax notices; compounding application on show cause for TDS default; verification of books for TDS/ TCS/ equalisation levy compliance; application for pending income-tax demand and refund; charitable trust taxation and compliance; income-tax scrutiny and CIT(A) for all types of taxpayers including individuals, firms, LLPs, corporates, trusts, non-resident individuals and companies.
He regularly represents clients before the income tax authorities including the commissioner of income tax (appeal).... more
PADMAKUMAR Question by PADMAKUMAR on Sep 21, 2024Hindi
Listen
Money

Sir, 1) I have a flat which is now under re-development. I plan to sell the flat. So, whether any Capital Gain is to be paid under Income Tax or any other amount is to be paid. 2) I have also booked another flat which has been delayed considerably and now I plan to take refund of the same as the RERA authorities have ruled the case in my favour. Hence, whether any Capital Gain is to be paid under Income Tax or any other amount is to be paid. 3) I plan to purchase a new flat on getting the refund amount but probably before selling the first flat which is under re-development as mentioned in Point (1). So, whether Capital Gain will have to be paid or otherwise.

Ans: In case of re-development, capital gain tax is required to be paid in the year in which certificate of completion is issued for new property but as you are transferring it before receiving completion certificate, you have to pay tax in the year of transfer.

Also when you are transferring under construction property, you are transferring rights which is also capital asset, accordingly you have to pay capital gain on that as well.

Exemption from both of the above said capital gain will depends on certain conditions of Sec 54 and 54F.
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
Money

You may like to see similar questions and answers below

Hardik

Hardik Parikh  |106 Answers  |Ask -

Tax, Mutual Fund Expert - Answered on Jul 23, 2023

Asked by Anonymous - Jul 20, 2023Hindi
Listen
Money
Hellow Sir, In February, 2023 I had sold a House Property and there is Capital Gain around 15.00 lakh. From the sale proceed I received, I have already bought a housing plot(land) costing Rs.11.00 Lakh, in May, 2023, in a Govt. approved scheme and this has also been registered in my favour. All other formalities for its mutation has also been completed. Since I am planning to construct house on this newly acquired Plot in next 2 years, kindly guide:- (1)whether the amount already incurred in acquiring above Housing Plot would also be considered against utilization of Capital Gain ? (2)the amount I have to kept in the Capital Gain Account Scheme for utilization during construction of House shall be Rs.15.00 Lakh OR Rs.4.00 Lakh (after deducting cost of Plot i.e. Rs.11.00 Lakh) ? Kindly Guide Regards !
Ans: Hello,

I understand your situation and I'm here to help. Based on the details you've provided and the current tax laws in India, here's what you need to know:

1) The amount you've spent on acquiring the housing plot can indeed be considered for the utilization of your capital gain. As per the Income Tax Act, if you reinvest the capital gains from the sale of a property in buying a new property or constructing a new house, you can claim tax exemption on the capital gains.

2) The amount you need to keep in the Capital Gain Account Scheme (CGAS) would be the remaining amount after deducting the cost of the plot from the capital gain. In your case, if you've already spent Rs. 11.00 Lakh on the plot, you would need to keep Rs. 4.00 Lakh (Rs. 15.00 Lakh - Rs. 11.00 Lakh) in the CGAS. This amount should be utilized for the construction of the house within the specified time period, which is 3 years from the date of sale of the original property.

..Read more

Sanjeev

Sanjeev Govila  |458 Answers  |Ask -

Financial Planner - Answered on Jul 28, 2023

Listen
Money
I have some queries regarding tax on sale of my property which I need to show in my Income Tax return in FY-2023-24. I had purchased a flat in Kolkata at a total cost of 8.50 lacs [including registration cost] and registration was done in April, 2004. I had sold the said flat in May,2023 at Rs.31 lacs. My queries are :- 1. Do I need to pay Capital Gain tax on the sale of this flat ? 2. How much tax do I need to pay ? 3. How to show this capital gain income and tax in my Income Tax retirn next year ? Please advise. Regards, Ratan K. Saha
Ans: You need to understand the following things about taxation of your flat:-
1. You have earned a profit (called capital gains in this context) on the sale of your house. So tax is due.
2. However, tax will not simply be 31L – 8.5L. The Govt gives you an advantage of inflation over the years which increases your purchase cost through a process called ‘Indexation’, thus decreasing your tax. Please google and read up on it, or contact a good CA or a financial advisor.
3. You also get credit for registration and stamp duty charges, brokerages paid as also any improvements done in the house of a permanent nature.
4. Please read up on Income Tax Section 54 which also gives out how you can save tax on your final capital gains arrived at.
5. The entire calculations and sale/purchase details have to be shown in the ITR. Most probably you will be filling ITR-2 for this next year but please ascertain the same when you are about to file the tax since rules keep changing.

..Read more

Tejas

Tejas Chokshi  | Answer  |Ask -

Tax Expert - Answered on Aug 07, 2023

Listen
Money
Sir, during this month (August2023) I sold my flat which was purchased by me in 2010. The total sale consideration as per govt guidelines was Rs 5973000/ and was registered at that amount, accordingly TDS at 1% on it was deducted at Rs 59730 and was credited to the govt account. My query is , TDS on sale of property at 1% is applicable in case the amount of sale exceeds Rs 50.00 lakhs . Whether the TDS is applicable on full sale consideration or on the difference amount ie, (5973000-500000)Rs 973000. 2. I had purchased the flat in April 2010 and the purchase price was Rs 3150000/ including Stamp duty, Registration charges and small amount towards interior work. I request you to advise me the applicability of Capital Gain Tax on it. Now I do not want to invest in any new property or in Capital gain bonds, I want to pay the applicable tax and close the transaction. Please advise me about the applicable Tax and close the formalities applicable in this regard. Siddramappa Kudarimoti.
Ans: The TDS (Tax Deducted at Source) of 1% on the sale of property exceeding Rs 50 lakhs is applicable on the full sale consideration. In your case, since the total sale consideration was Rs 5,973,000, the TDS of Rs 59,730 was deducted as per the guidelines. Based on the information you've provided, you might be liable for Capital Gains Tax. Capital Gains Tax is calculated based on the difference between the selling price and the indexed purchase price. The indexed purchase price adjusts the original purchase price for inflation over the holding period.
The tax on long-term capital gains is usually 20% (plus applicable surcharge and cess) after considering any exemptions or deductions available under Section 54 or Section 54F if you are not investing in another property or capital gains bonds.

To close the transaction and fulfill your tax obligations, you should consider the following steps:

a. Calculate Capital Gains: As explained above, calculate the capital gains based on the indexed purchase price and selling price.

b. Pay Capital Gains Tax: If you decide not to invest in another property or capital gains bonds, you will need to pay the applicable capital gains tax. You can do this by filling out the appropriate sections in your income tax return and paying the tax amount.

c. File Income Tax Return: Ensure that you accurately report the capital gains in your income tax return for the assessment year.

d. Keep Documentation: Maintain all relevant documents related to the property sale, purchase, and tax calculations for future reference

..Read more

T S Khurana

T S Khurana   |481 Answers  |Ask -

Tax Expert - Answered on Nov 23, 2024

Asked by Anonymous - May 11, 2024Hindi
Listen
Money
Can you please suggest on capital gains as per Indian taxation laws arising in the below two queries : 1) property purchased with joint ownership, me and my wife’s name in 2015 at a cost of 64,80,000, housing improvements done for the cost of 1000000 and brokerages of 200000 paid and sold the same property at 10000000 in Dec 2023? 2) 87% of the proceeds got from the deal i.e 8700000, have been reinvested to pay 25% amount in purchasing another joint ownership property in Dec 2023, 3) I have invested in another under construction property in Nov 2023 by taking housing loan, which is on me and my wife’s name worth 1.4 cr, here the primary applicant is me only while wife is just made a Co applicant in the builder buyer agreement and also on the housing loan . So what are the LTCG tax liabilities arising from the above 3 scenarios for FY 2023-2024 and FY 2024-2025. I intend to sale off the property acquired in (2) by Dec 2024 and use that proceeds to close the housing loan for the property acquired in (3), will this sale of property be inviting any tax liabilities if the complete proceeds received from the sale of the property in (2) would be utilised to close the housing loan taken in Nov 2023 for the property in (3) ? Since in FY 23-24, I would be claiming the LTCG from the sale proceeds of 1) invested in the purchase of property in 2), and I intend to sale off this property in Dec 2024, will the LTCG claim be forfeited on the property sale in (1), should I hold this property at least for further 1 year so that sale of this property in 2) will not invite STCG?
Ans: (A). Let's first talk about F/Y 2023-24 :
You jointly sold a Property during the year for Rs.76.80 lakhs (64.80+10.00+2.00), & sold the same for Rs.100.00 lakhs.
You have jointly also purchased Property No.3 (I suppose it is Residential only), for Rs.140.00 lakhs.
You should avail exemption u/s-54 & file your ITR accordingly. Please disclose all details about sale & purchase in your ITR.
02. Now coming to the F/Y 2024-25 :
You intend to Sell Property No.2, which was acquired in 2023-24. Any Gain on Sale of it would be Short Term capital Gains & taxed accordingly.
Alternatively, you may hold this sale of property no.2 (for 2 years from its purchase) & avoid STCG
You are free to utilize the sale proceeds in a way you like, including paying off your housing Loan.
Please note to avail exemption u/s 54 only from investment in property no.3 & not 2.
Most welcome for any further clarifications. Thanks.

..Read more

Latest Questions
Patrick

Patrick Dsouza  |1112 Answers  |Ask -

CAT, XAT, CMAT, CET Expert - Answered on Jun 11, 2025

Asked by Anonymous - Jun 10, 2025
Career
Hi I joined Wipro in 2019 just after my graduation through campus placement. From then I had in my mind that I will do an MBA from a good college. as I thought I will be better in non technical things and management roles. I was not an IT guy at heart. Just an average guy with 6.62 CGPA from Amity University. I was in 3 projects in Wipro. 1st was incident management, 2nd was Application Testing(Automation tester) and 3rd was Big Data development. (Big Data Developer) I wanted to leave wipro after 3 years but my family members told me not to do so and keep trying for a good project in the organisation. Everyone advised me not to leave the organization or search for another IT job. I tried but did not get a good project in Wipro. I also tried for post of Data Developer in other companies but was not able to do so. Then I left Wipro in June, 2023 so that I can crack CAT in November 2023. I also joined coaching for the same. BUT was able to score only 49 % in CAT and 79% in XAT. Again I tried again in Cat 2024. This time i was doing self study only for CAT. Meanwhile i was also asked by my family to prepare for government bank exams. I also joined MAHENDRAS for that. My brothers marriage was scheduled in the month of November. I was able to score 88.69% in CAT 2024 and 61% in XAT. Should I give another try for CAT because i think I can still crack more than 99%. I know it. and also they are many 28yrs + people at IIMs OR am I too old for MBA and should not try more?? Year of birth - 1997. 10th -89.33%(2013) 12th-83.00%(2015) Grad- 6.62 CGPA (2015-2019,Btech CSE) Exp-3 yrs 10 months in WIPRO( July 2019 to June 2023) Kindly guide me in this matter. I am a little bit confused .
Ans: If you have not got admission to a good college you can give another attempt. I had a student this year who passed his graduation in 2018 and had work ex of 2 years and gap of 4 years - managed to get into top 8 IIMs with a 97%ile. But it is recommended to write CAT exam while doing a job as you already have 2 years of gap.

...Read more

Patrick

Patrick Dsouza  |1112 Answers  |Ask -

CAT, XAT, CMAT, CET Expert - Answered on Jun 11, 2025

Asked by Anonymous - Jun 10, 2025
Career
Hi I joined Wipro in 2019 just after my graduation through campus placement. From then I had in my mind that I will do an MBA from a good college. as I thought I will be better in non technical things and management roles. I was not an IT guy at heart. Just an average guy with 6.62 CGPA from Amity University. I was in 3 projects in Wipro. 1st was incident management, 2nd was Application Testing(Automation tester) and 3rd was Big Data development. (Big Data Developer) I wanted to leave wipro after 3 years but my family members told me not to do so and keep trying for a good project in the organisation. Everyone advised me not to leave the organization or search for another IT job. I tried but did not get a good project in Wipro. I also tried for post of Data Developer in other companies but was not able to do so. Then I left Wipro in June, 2023 so that I can crack CAT in November 2023. I also joined coaching for the same. BUT was able to score only 49 % in CAT and 79% in XAT. Again I tried again in Cat 2024. This time i was doing self study only for CAT. Meanwhile i was also asked by my family to prepare for government bank exams. I also joined MAHENDRAS for that. My brothers marriage was scheduled in the month of November. I was able to score 88.69% in CAT 2024 and 61% in XAT. Should I give another try for CAT because i think I can still crack more than 99%. I know it. and also they are many 28yrs + people at IIMs OR am I too old for MBA and should not try more?? Year of birth - 1997. 10th -89.33%(2013) 12th-83.00%(2015) Grad- 6.62 CGPA (2015-2019,Btech CSE) Exp-3 yrs 10 months in WIPRO( July 2019 to June 2023) Kindly guide me in this matter.I am a little bit confused.
Ans: If you have not got admission to a good college you can give another attempt. I had a student this year who passed his graduation in 2018 and had work ex of 2 years and gap of 4 years - managed to get into top 8 IIMs with a 97%ile. But it is recommended to write CAT exam while doing a job as you already have 2 years of gap.

...Read more

Patrick

Patrick Dsouza  |1112 Answers  |Ask -

CAT, XAT, CMAT, CET Expert - Answered on Jun 11, 2025

Asked by Anonymous - Jun 10, 2025
Career
Hi I joined Wipro in 2019 just after my graduation through campus placement. From then I had in my mind that I will do an MBA from a good college. as I thought I will be better in non technical things and management roles. I was not an IT guy at heart. Just an average guy with 6.62 CGPA from Amity University. I was in 3 projects in Wipro. 1st was incident management, 2nd was Application Testing(Automation tester) and 3rd was Big Data development. (Big Data Developer) I wanted to leave wipro after 3 years but my family members told me not to do so and keep trying for a good project in the organisation. Everyone advised me not to leave the organization or search for another IT job. I tried but did not get a good project in Wipro. I also tried for post of Data Developer in other companies but was not able to do so. Then I left Wipro in June, 2023 so that I can crack CAT in November 2023. I also joined coaching for the same. BUT was able to score only 49 % in CAT and 79% in XAT. Again I tried again in Cat 2024. This time i was doing self study only for CAT. Meanwhile i was also asked by my family to prepare for government bank exams. I also joined MAHENDRAS for that. My brothers marriage was scheduled in the month of November. I was able to score 88.69% in CAT 2024 and 61% in XAT. Should I give another try for CAT because i think I can still crack more than 99%. I know it. and also they are many 28yrs + people at IIMs OR am I too old for MBA and should not try more?? Year of birth - 1997. 10th -89.33%(2013) 12th-83.00%(2015) Grad- 6.62 CGPA (2015-2019,Btech CSE) Exp-3 yrs 10 months in WIPRO( July 2019 to June 2023) Kindly guide me in this matter.
Ans: If you have not got admission to a good college you can give another attempt. I had a student this year who passed his graduation in 2018 and had work ex of 2 years and gap of 4 years - managed to get into top 8 IIMs with a 97%ile. But it is recommended to write CAT exam while doing a job as you already have 2 years of gap.

...Read more

Radheshyam

Radheshyam Zanwar  |3086 Answers  |Ask -

MHT-CET, IIT-JEE, NEET-UG Expert - Answered on Jun 11, 2025

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

Close  

You haven't logged in yet. To ask a question, Please Log in below
Login

A verification OTP will be sent to this
Mobile Number / Email

Enter OTP
A 6 digit code has been sent to

Resend OTP in120seconds

Dear User, You have not registered yet. Please register by filling the fields below to get expert answers from our Gurus
Sign up

By signing up, you agree to our
Terms & Conditions and Privacy Policy

Already have an account?

Enter OTP
A 6 digit code has been sent to Mobile

Resend OTP in120seconds

x