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Redevelopment of pagri premises

Dr Mishal De Souza (dentist) (25 Points)

10 February 2014

I have a commercial pagri shop. the building is now going for redevelopment. We have had the shop for 15 years. Am I liable for capital gains tax for the new shop

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4 Replies

CA BHAVESH MEHTA (self employed) (67 Points)
Replied 10 February 2014

Yes you are liable for capital gain tax . because in your case you are transfering your tenancy right in favour of developer but as you said that you had this shop for 15 years so capital gain will be treated as Long term capital gain and also you are also eligible for Indexation benefit.

CA Bhargav Nathwani (CA in Practice) (8307 Points)
Replied 10 February 2014

Yes, Attract Long Term Capital Gains.

Dr Mishal De Souza (dentist) (25 Points)
Replied 11 February 2014

Thank you on what basis will the tax be calculated as technically no money is exchanging hands. the developer will be taking the old shop and providing a new one in the building. also since the place is pagri, the cost off aquisition would be 0 Thanks

Mihir (Wealth Manager) (5293 Points)
Replied 11 February 2014

You were a tenant having a shop in a building. The building is undergoing redevelopment. The building shall be demolished and a new building shall be constructed by the developer. And you shall be restored in the new building maybe with some additional benefits such as extra space. In this case, there is not sale or transfer of tenancy rights. There cannot be any capital gains. If you are paid a token or a inconvenience amount, which is given to everybody, that shall be taxable.