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Mihir Tanna |1070 Answers |Ask -Follow

Tax Expert - Answered on Jan 11, 2023

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

Question by Prasanna on Jan 10, 2023Hindi

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Dear Mihir. In a city like Mumbai when a building goes for redevelopment the existing tenants either get another house for their existing homes or gets remunerated by the developer based on current market value. How is such remuneration taxed? Where can one find more information about such tax issues related to redevelopment scenarios? Regards

Ans: As per the provision of the Income Tax Act, in case owner of residential property, transfer said building for the redevelopment project and because of said transfer, any capital gains arising to those individuals, such gains would be taxable in the year in which the competent authorities issue a certificate of completion for such project. However, in case where the said individual transfer his share in the redevelopment project i.e. transfer the building before the said completion certificate is issue, the capital gains shall be taxable in the year in which the transfer takes place and the above provision of the act would not be applicable.Therefore, if Mr. Prasanna D does not transfer his share in the redevelopment project till the date of issue of completion certificate, then the above provision of the act applied and tax required to be paid in the year when completion certificate is received. However, if Mr. Prasanna D get remunerated from developer it seems that Mr. Prasanna D selling his share in redevelopment project before issue of completion certificate and therefore the tax require to be paid in the year when he actually entered into the agreement with developer.And for the purpose of calculation of capital gains, the stamp duty value (SDV) of the building as on date of issue of completion certificate, pertaining to the owner’s share in the redevelopment project or any remuneration received shall be taken into account and tax require to be paid on such gain arising to Mr. Prasanna D.

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