Capital gains ... ..

• An under-construction flat can be sold before possession by transferring contractual rights to another buyer. This is called an “assignment of allotment,” and is typically formalized through a tripartite agreement among the seller (current allottee), buyer, and builder.

• Builders usually require their consent (a No Objection Certificate) before the transfer, and may charge a transfer fee. Terms of such transfers are mentioned in your Builder Buyer Agreement.

• The transaction is treated as a transfer of the “right to acquire the property” until the flat is registered or possession is taken.

• If sold within 24 months (two years) of allotment, gains are taxed as Short-Term Capital Gains (added to income and taxed as per slab).

• If sold after 24 months, gains are treated as Long-Term Capital Gains (LTCG) and taxed at 12.50% without indexation benefits.

Selling an under-construction flat bought 2 years ago:

• Holding period runs from the allotment or agreement date. If more than 24 months on the sale date, LTCG at 12.5% without indexation (or 20% with indexation for residents, if acquired before 23 July 2024); otherwise STCG at slab rates.

• Cost = amounts paid to the builder (including loan-funded portions). Interest on the loan isn't part of the cost if claimed under 24(b); unclaimed pre-construction interest can arguably be added.

• Sec 54 or 54EC can save LTCG.

Yes, you can generally transfer your rights in an under-construction flat, subject to the builder’s agreement, any required builder consent/NOC, and the lender’s approval or loan settlement. The agreement may restrict assignment or charge a transfer fee, so check it before committing. A sale to another buyer is usually an assignment of your booking/allotment rights; a buyback by the builder depends on the builder agreeing to it.

For income tax, the profit is generally taxed as capital gains if the flat rights were held as an investment; if you regularly deal in properties, the treatment may instead be business income. The holding period and acquisition cost—including eligible instalments and related costs—affect the calculation and tax rate. A builder cancellation/refund may have different consequences depending on the agreement and amounts forfeited. GST treatment can also differ between an assignment to a buyer and cancellation/refund by the builder, so have the transaction documents reviewed before fixing the price. The exact tax result depends on the booking date, proposed transfer date, payment history, and contract terms.

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