Capital gain taxation in case developer agreement

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kumar manish (Querist)
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19 March 2014 one of my client had entered into land development agreement with a builder to construct apartment on flat sharing basis. what will be the methodology for tax liability computation and how will cost of acquisition be computed.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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19 March 2014 Assuming your friend as the land owner, the tax liability shall arise on the date of transfer of land to the builder. The consideration shall be equivalent to the cost of the flats you receive.

If the land was held for more than 36 months it shall be considered as a long term asset and you shall get automatic exemption under 54f.

However, if you sell your share of houses, the exemption shall be withdrawn and taxed as short term capital asset

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