Practical Finance Training
47 Points
Posted on 06 June 2026
In case the rent received by the developer is as transit rent / alternate accommodation in the redevelopment, there is no specific field for redevelopment rent in ITR-2.
This tax treatment will vary depending on the type of receipt:
Several judicial decisions have viewed paying compensation/transit rent for temporary displacement during redevelopment as a capital receipt, and therefore not taxable if it is a genuine hardship.
Many taxpayers take a conservative approach and report it as "Income from Other Sources" if they have any doubt, however.
It should not ordinarily be displayed under "Income from House Property" as you are not letting the property to the developer and it is not the rent income of a tenant.
My advice: Carefully read the redevelopment agreement. If the payment is restricted to a “transit rent”, “hardship compensation”, or “displacement compensation”, be sure to review your CA's latest Judicial position before filing the return. The specific terms of the agreement will be important to establish the appropriate tax treatment.