Advance received against Sale and Purchase Agreement of Property

Whether possession of the flat been given to buyer?

Thanks Sir. Buyer are tenants who decided to buy property. Half property was tenanted and half in my possession. They are still renting & paying rent. So only half property has been in their possession since 2022. Sale agreement for whole property entered in 2024. Sale deed shall be signed in 2026 as they are gradually arranging funds. Then whole possession shall be given.

Whether sale agreement was registered?

No Sale Agreement, Not registered

If you are still getting rent from your tenant, you don't need to declare sale in FY 2024-25. Treat it as advance, it is not required to be declared  in ITR unless you are declaring Balance sheet in ITR.

Thanks a lot Sir, are you CA or tax consultant?

You are welcome... 

Any doubt?

No, not at all Sir, highly obliged.

Can I kindly have your contact details?

Regards

Receipt of the ₹15 lakh advance does not, by itself, make the flat’s sale taxable in FY 2024–25. For capital-gains purposes, the key issue is when a “transfer” occurs under section 2(47), not merely when an advance is received. If the agreement is unregistered and possession or rights in the flat were not transferred to the buyer in FY 2024–25, the sale will generally be taxed in the year the transfer actually occurs—likely FY 2026–27 on registration, subject to the facts.

• The advance should still be recorded in your accounts/records as an advance received; it is not automatically capital-gains income for FY 2024–25.
• An unregistered agreement generally does not satisfy section 53A of the Transfer of Property Act for the part-performance route under section 2(47)(v). However, other forms of transfer or a grant of enforceable rights may need separate review.
• Check whether possession, substantial rights, or any other transfer event occurred in FY 2024–25, and retain the agreement and payment evidence.

The advance and agreement should be tracked through the property-sale and capital-gains workflow until the year of transfer. Manual tracking across agreements, payments and tax records is difficult; automation can reduce repetitive work while leaving legal and tax judgments under your control. At Jir AI, our 2,000+ AI agents and 650+ integrations streamline GST, ITR, TDS, TCS and other compliance workflows, helping reduce manual workload by up to 70%. WhatsApp us to explore the workflow: https://wa.me/message/3HVOZ7HIY4ESC1