Long term capital gain tax

Hello,

Case: An Agricultural Land which was purchased on December 2015 has been sold in March 2018 by executing GPA and Sale Agreement in favor of Buyer by registering the same in Sub-Registrar Office. There is no Sale Deed is executed between Seller and Buyer. Sale Price is more than Purchase Price. Now Buyer of this Agricultural Land has converted as Non Agricultural Land with the intention of real estate development.

Question: Whether Long Term Capital Gain arises and consequent Long Term Capital Gain Tax @ 20% for Seller of above agricultural land since no Sale Deed is executed and sold to Buyer basis only GPA and Sale Agreement.

Kindly assist with answer. Thanks in advance for help

 

Replies (2)

The provisions of Section 53A ,envisages situations where under a contract for transfer of immovable property , the purchaser has paid the price and has taken possession of the property even though the transfer deed or conveyance has not been registered. In such cases the transferor is debarred from agitating his title to the property against the purchaser.

For more detailed analysis refer: : section-53a-transfer-property-act   

As per Sec. 2(47) of IT act.....

(47) "transfer", in relation to a capital asset, includes,  .... ..... ....... ...... 

(v) any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882)

So, depending upon the registered sale agreement, and possession of the peoperty, capital gains tax liability arises in PY 2017-18.

Thanks a lot. Agree with your analysis. 

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