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LTCG or Business Income in Real Estate

This query is : Resolved 

Hi Experts,

My mother owns a residential property in Hyderabad, Telangana. The property is a plot with house construction and was purchased in 2001. She intends to dismantle the old house and develop the land into residential apartments. She is willing to finance the construction by herself and will be giving a construction contract to a builder. The residential apartments so built will be sold to homebuyers.

The query is, will the sale proceeds of the residential apartments be taxed as LTCG or Business Income? Will she able to offset cost of construction against the LTCG? Will there be any STCG component?


The sale proceeds of the residential apartments be taxed as business income.
Calculate capital gains on plot considering the market value on the date of conversion.


Bajaj Finserv

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