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Advance received on sale of house property

01 July 2017

An advance was received on sale of house property in Feb 2017 but sale is not completed as on 31st march 2017 and also sale completed in next F.Y.2017-18. Whether this advance received in F.Y.2016-17 is taxable in A.Y.2017-18 IT return??

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14 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (193906 Points)
Replied 01 July 2017

Whether any sale agreement was made or registered while receiving the advance, or in FY 2016-17?

Whether any TDS was deducted in FY 2016-17?

1 Like

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Chenchu Rathnam (9 Points)
Replied 01 July 2017

Agreement was made on May 2017 for advance recieved as a revocable advance( advance has to be returned if sale not completed)and sale still not completed and no TDS deducted in FY 2016-17

Narayana Moorthy (75 Points)
Replied 01 July 2017

It is not liable to tax beacause your agreement stated refundable if sale will not happen

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (193906 Points)
Replied 01 July 2017

"Whether this advance received in F.Y.2016-17 is taxable in A.Y.2017-18 IT return??"

No......... Treat is as advance c/f...........

Chenchu Rathnam (9 Points)
Replied 01 July 2017

OK thank you sir for your valuable response

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PRABIR PAUL (*****Accountant***** Never insult to any person for any kind of lack of knowledge or misread.) (1448 Points)
Replied 01 July 2017

Dear Mr. Chenchu,

Here payment is not important,

Possession is important.

You have pay tax in that FY when you make the possession.

Manoj kumar reddy (Student) (2 Points)
Replied 30 March 2018

SIR,

IF TDS DEDUCTED ON ADVANCE BUT SALE IS NOT COMPLETED? IS THAT ADVANCE TAXABLE?

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (193906 Points)
Replied 30 March 2018

Yes, if advance is forfeited......

No, if returned back......

Deepak (Professional) (26 Points)
Replied 12 May 2018

Sir, I have to sell my property and ltcg benefit I will get in end of next month (property registered in June 2016, but allotment agreement was done in 2011 but agreement was not registered), but buyer is ready to pay advance now to close and sale agreement of advance payment will be done after the deal but registration of property transfer will take place in july. So should I not take any advance before completing 2 years of registration?

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (193906 Points)
Replied 13 May 2018

"I have to sell my property and ltcg benefit I will get in end of next month (property registered in June 2016, but allotment agreement was done in 2011 but agreement was not registered)"

Ans.: No. The period of holding the property starts from date of possession. In case you are possessing property from or before May 2016, you are entitled to get long term capital gains benefits.

"but buyer is ready to pay advance now to close and sale agreement of advance payment will be done after the deal but registration of property transfer will take place in july. So should I not take any advance before completing 2 years of registration?"

Ans. Unless there is any condition from the allottee to mandatorily hold property after registration for any specific period, you can sell it any time after 2 years of possessing it. (for long term holding as per IT act.) So, you may not wait till July, 2018.

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Deepak (Professional) (26 Points)
Replied 01 June 2018

Ok, thank you sir, one more query, the long term capital gain is calculated from the date of allotment or from the date of physical possession after registration?

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (193906 Points)
Replied 01 June 2018

For properties, generally, possession date has more leverage.

S Bhakta (Associate) (22 Points)
Replied 11 July 2019

Sir, Do we need to mention advance received for a property while filing returns for that year even though the sale is not complete and the advance amount is invested in another property (apartment)?