Tax consequences on redevelopment of existing house

 Individual assessee’s one residential property is gone for redevelopment. In return assessee is getting some amount of rent. He has also received a corpus amount as lumpsum compensation. After reconstruction of the new building the assessee will get a flat in that new building of bigger area than the original one.

 

1.      Corpus amount received is like a capital receipt and every capital receipt is tax free.

2.      Assessee gets one residential house in the new building and hence giving up his old property would be a “transfer” as per section 2(47) of the Income Tax Act, 1961 and hence taxable for capital gains purposes.

 

1.      Is the received rent amount taxable since assessee is staying in another self-owned house?

 

2.      Is corpus amount a taxable capital receipt?

 

3.      Assessee gets one residential house in the new building so is it taxable due to transaction being “transfer” as per section 2(47) of the Income Tax Act, 1961. If yes then when is it taxable?

 

4.      Is there any capital gains tax exposure? If yes then what is it like and can section 54 exemption be taken?

  

 

  Thanks and regards,

 

  Nikhil