Booking of under construction property

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This discussion clarifies the correct date for booking an under construction property in your company's accounts, which is the registry date. It also explains that for capital gains tax purposes, the relevant date is the allotment letter date. Payments made up to the registry date are treated as advances, after which the builder is considered a creditor.

CA. Aditya Goel

CA. Aditya Goel (Querist)
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16 July 2020 I have bought an under construction flat from builder.

date of allotment letter is 1.4.19
sale agreement is on 1.7.19
Registry date 1.7.20

on which date shall I book this property? and how all the payments made so far to be treated? before which date all payments are advances and after which date builder becomes creditor/liability.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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16 July 2020 All payments made upto registry date will be advances. After registration builder become creditor.

CA. Aditya Goel

CA. Aditya Goel (Querist)
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16 July 2020 ok means on date of registry will book this property as asset in my books right?
but for captial gain cost of acquisition will be the allotment date, right?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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16 July 2020 Yes, book it on registry date in the books of accounts. Consider allotment date for capital gains.

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