LAND & BUILDING ISSU E

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Quick Summary

This discussion concerns the accounting treatment of advance payments received by building owners from a developer. The core question is whether this advance attracts capital gains tax immediately or upon receiving the alternative space, flats, and shops. It's clarified that the advance should be entered as 'Advance against sale of building' and tax implications are generally considered upon the completion of the development.

TARIQUE RIZVI

TARIQUE RIZVI (Querist)

09 July 2023 Respected Sirs,

We have two storeyies building having a builtup area of 5000 sq ft. A builder has taken over the full riots of the building for developing purpose and has given us some money in advance and later some more shall be paid to us with some alternate space area and few flats and shops etc.
I would like to know that the initial amount paid to us in advance shall be entered as in which account. Will it attract capital gain tax? Or capita gain tax shall be payable after taking the possession of the alternate space, flats and shops etc

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

10 July 2023 The capital gains over the advance received along with other gains in aggregate, will be payable in the year of completion of the building.

TARIQUE RIZVI

TARIQUE RIZVI (Querist)

10 July 2023 Dear Dhirajlal ji
Rgds to you

Actually I would like to know that the initial amount paid to us in advance shall be entered as in which account ?

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

10 July 2023 Advance against sell of building acc.

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