Long term capital gain tax on jd agreement

Save Share

This query is : Resolved

Quick Summary

This discussion clarifies the calculation of long-term capital gains tax (LCGT) for landowners entering a Joint Development Agreement (JD). According to Section 45(5A) of the Income-tax Act, 1961, capital gains are taxable in the year a completion certificate is issued. The taxable value includes the stamp duty value of the owner's share in the new project, plus any cash received. The consensus is to consider the value of the flats handed over by the builder as the owner's share for tax purposes.

Venkat Subramanian

Venkat Subramanian (Querist)
Follow

30 April 2024 Land purchased / buildg constructed during 1989 at CHENNAI. Now under JD with Builder in APRIL 2024 50/50 ratio - 3 flats will be for owner & 3 flats will be sold by Builder - possession approx by AUG 2025. How to calculate LCGT for the land owner, when this is due FY24-25 OR 25-26

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
Follow

01 May 2024 It's due in FY 25-26.
Legal Provisions- Section 45(5A) of the Income-tax Act, 1961:- If any Individual or HUF has transferred any land or building or both being a capital asset under a Registered Joint Development Agreement, the capital gains shall be chargeable to income-tax as income in the year in which the full or part completion certificate is issued by the Local authorities to the newly constructed project developed under the joint development agreement. The full value of consideration shall be the stamp duty value of the share of the original owner in the project alongwith cash consideration received, if any and the capital gains shall be worked out as per section 48 accordingly.

Venkat Subramanian

Venkat Subramanian (Querist)
Follow

01 May 2024 Thanks sir
Here the Stamp Duty value of the Owner means his share of 50% of Land value Or we have to consider the 3 Flats value handed over by Builder
Please clarify this
Thanks

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
Follow

01 May 2024 Consider value of 3 flats handed over by builder.

Venkat Subramanian

Venkat Subramanian (Querist)
Follow

02 May 2024 Thanks a lot for the detailed reply

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
Follow

02 May 2024 You are welcome..
...

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now