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Taxation on advance consideration received and sale agreement is in next FY year

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KALPESH JOSHI

190 Points Posted on 31 October 2021

I am selling my land to one person, for that he has given me some advance payment in(FY 21-22)and told me that transfer of asset(sale agreement) will take place in next FY year (FY 22-23).

Do I need to pay capital gain tax on that advance amount received while filing ITR in the current year(part payment), and for next FY year when the sale agreement will take place pay the capital gain tax on the remaining amount which I will be getting after transfer of asset.???

If yes then I might expire the window of 6 months for exemption u/s 54EC

BUT, As the law of ITR says, the capital gain has to be paid in the same year of transfer of asset.

Need the opinion of experts.

Thanks

Replies (2)

Quick Summary

This discussion explores the tax implications of receiving an advance payment for land in one financial year, with the sale agreement scheduled for the next. The core question is whether capital gains tax is due on the advance received or only upon the final transfer of the asset. Experts advise that capital gains tax should typically be paid in the year the sale agreement is registered, treating the advance as such until then, especially if TDS under Section 194-IA hasn't been deducted.