Settlement with Builder - Tax Liability

Tax queries 220 views 6 replies

If a flat is booked with the builder under BBA. But due to certain reasons, client did  not take possession and had a litigation case running in consumer court. Builder wants to settle the matter out of court. If the cost of property is 40 lacs and builder offers 60 lacs as total amount of settlement. So, have below queries:

1. What will be the tax liability in this case?

2. Will the excess amount considered as capital gains or interest amount?

3. Any particular document would be required from builder in this case?

4. Will excees amount be clubbed ot normal income?a

Replies (6)
It's not the purchasers responsibility.
2.pls post details
3. all the documents related to put the building put to use.
4. yes excess amount will be clubbed.
Sale of rights is within preview of Capital Asset and therefore the difference between amount paid while booking the property and realised by builder should be treated as Capital Gains.

Tenure will depend upon allotment date and date of settlement.
Agreement with Shashank Upadhyay ji.

Thank you all for your inputs. What is sale of rights? How to implement it in correct way? Builder asking to give DD for full amount in the buyers account. Any risk in this?

If its a lease land then not possible

Sir. Please connect on phone. Your last reply regarding DD has opened a whole net dimension of queries.


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