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Capital gain tax on sale of flat developed on ancestral land

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SADAN SINHA

21 Points Posted on 10 September 2018

Dear Madam/Sir,

I inherited a piece of land with a dilapidated building( almost 100 years old) on it . I gave it to a developer. The dilapidated building was demolished and flats were constructed by developer.Per agreement I got 2 flats( being 40% of the total carpet area generated.. He is free to sell other flats( 60% of carpet area).. I did not pay him any capital for construction of these flats. He did everything. If I sell these two flats, will capital gains tax be applicable? For example if I sell flat for say 40 Lakh, it is not the whole gain to me as developer has spent money on the plot of land to construct the flats. Only after this investment the cast of flat is 40 lakh.( ie cost of land +cost of construction). Plus I have forgone 60% of carpet area. How to quantify the Capital gained as value has been added to the land before being put up for sale?

I have no flat in my name in anyother place.

Kindly enlighten.

Thanks,

Sincere regards,

Sadan Kumar Sinha,

Navi Mumbai

Replies (3)

rama krishnan

5751 Points Posted on 10 September 2018

first capital gain have to be computed for your joint venture agreement made with developer. the sale consideration of the ancestral will be equal to the fair market value of the two flats and the nature of gain will be long term. if you again sale that flats, depending upon the holding period short term capital gain will be charged. if I'm wrong correct me