Tax liability of landowners under development agreements

It will depend on the terms and conditions of the development agreement. If you acquire flats in the newly constructed building, then capital gain will arise when you sell those flats. Also, whether the land is sold to the developer or not.

Originally posted by : Mihir
	It will depend on the terms and conditions of the development agreement. If you acquire flats in the newly constructed building, then capital gain will arise when you sell those flats. Also, whether the land is sold to the developer or not.

Sir

we did not sold the land but by jda he will get the rights on the land and he will give 3 flat in that exchange.  this thing he will mention on the first day through jda and we will get the possession  flat after completion only, may  be 2 year later. After getting we can sell too.

first of all we should know what is transfer within the meaning u/s 2(47) (given in short)

it includes sale, exchange, or relinqushement of the assets.

so here we exchanged land with 3 constructed flats. hence this exchange is regarded as transfer within the meaning of section 2 (47)

you have deemed transfer land piece on the date of JDA hence consideration price would be circle rate applicable on the date of JDA and calculate capital gain accordingly. now question arise whether one has to pay tax on that capital gain on such transfer (assuming LTCG) than answer is no because one has purchased another 3 flats with that consideration or capital gain hence eligible for exemption u/s 54.

let me know if i am wrong

Nicely explained by Tax Pandit.

Regards,