LIVE GST Certification Course by CA Arun Chhajer begins 27th April. Register Now!!

Capital gain on token money received

10 April 2019

I have received token money for sale of property in March and subsequent payments were received in next year. When will the long term capital gain be taxable?

Reply
Follow
Share

12 Replies

A B Kundu (Professional) (1422 Points)
Replied 10 April 2019

What is the date of agreement of sale?

rama krishnan (12234 Points)
Replied 10 April 2019

in the year of transfer

Vikas Mahajan (157 Points)
Replied 10 April 2019

31st march in which token money received

A B Kundu (Professional) (1422 Points)
Replied 10 April 2019

Then it will be treated as the transfer has been taken place in the FY 2018-19, hence assessable in the FY 2018-19.

Vikas Mahajan (157 Points)
Replied 10 April 2019

so you mean capital gain will be taxable with whole amount in fy 18-19 in which only token money received and date of agreement is entered

rama krishnan (12234 Points)
Replied 10 April 2019

suppose if you have handed over the possession of property on receipt of token money, then it is part performance of transfer and capital gain will attract. if not capital gain will be charged reckoning year of registration

1 Like

CA. Kasi Reddy Nallappa Reddy (Chartered Accountant) (153 Points)
Replied 10 April 2019

As per section 45 of Income Tax Act'1961, the profits or gains arising out of transfer of capital asset shall be chargeable to capital in the year in which transfer took place.

Section 45 is reproduced here as fallows:

Any profits or gains arising from the transfer of a capital asset effected in the previous year shall, save as otherwise provided in sections 54, 54B, 54D, 54E, 54EA, 54EB, 54F, 54G and 54H, be chargeable to income-tax under the head "Capital gains", and shall be deemed to be the income of the previous year in which the transfer took place.

In the preset scenario the you have just entered in to agreement transfer yet take place, there fore the said capital gain if any shall be liable income tax in FY 2019-20.

However, you can avail stamp duty value for computation of capital gain as on agreement date if the consideration received mode other than cash, if the total consideration is less the stamp duty value.

Let us know if any clarification/information required.

Giridhar S Karandikar (Team Lead) (7543 Points)
Replied 10 April 2019

yes capital gains wud arise in ty 2019-20 as whole consideration is yet to be received and transfer takes place only when the registered document is executed

rishi (article) (34 Points)
Replied 11 April 2019

As per section 2(47) transfer includes

Any transaction involving allowing POSSESSION of immovable property in part performance of contract will be transfer, so in your case transfer completes when you have received full/part money and possession is transferred.

if possession is handed over before 31 march capital gain shall be levied on whole transaction in the year ending 31 march. Date of actual registration of property will not make any difference.

montee Idaiyar (other) (341 Points)
Replied 11 April 2019

Yes, depends upon the terms incorporated in the agreement and if the possession is handed over to the purchaser, it will be treated as transfer on the date and hence capital gain tax liability for the entire amount arises on the same day.

3 Like