taxation of compensation amount

Kolkata Income Tax Applelate Tribunal in the case of Subhas Chandra Parmanandka (ITA No.1614/Kol/2010) held that income from transfer of right to purchase a flat is taxable as Capital gains. Compensation received over and above the booking amount is equivalent to consideration received on transfer of right to acquire property and is taxable under capital gains.
 

At the same time if the cancellation deed indicate the receipt as interest paid over the deposit amount, then the same will be added to your income under income from other sources, and will be taxed as per slab rate.

Refer:  interest-on-refunds-from-builders-adds-to-tax-burden

I told the builder to put that statement " compensation is paid towards the delay from my side as thus for investing the money for 9 years an additional compensation (8 lakhs)will be paid towards the full amount (20 lalhs)


so your saying that the 20 lakhs can be kept normally like fd sb etc.....and the interest generated from that amount IS ONLY NEEDED TO SHOW while filing itr (under income from interest).

but the remaining 8 lakhs can also be made an fd or what??

And i read about section 57 (iv) about showing  50% amount of compensation...will it be applicable in this case also...If yes does that mean i will put 4 lakhs in income from other sources

thank you in adv

" And i read about section 57 (iv) about showing  50% amount of compensation...will it be applicable in this case also..."

No....... it is for interest paid over compensation in case of compulasory aquisition.

In your case the compensation received will be capital gain (with proper drafting of deed) and not interest. The same will be charged at 20% after indexation benefit.

Here, all the payments from 2009 to 2013 will be indexed till 2018 (date of sale/transfer).

After indexation final LTCG will be taxed at 20%.......... no need to park the amount in any CGSA.... you can invest it the way you like.