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Treatment of memorandum of understanding

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Vinay Bhatnagar

49 Points Posted on 06 February 2023

person purchased a flat by memorandum of understanding n DLC is more than purchase, date of agreement and date of purchase is different. whether there is LTCG. what treatment should be done in this case

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Quick Summary

If you've purchased a flat using a Memorandum of Understanding (MoU) where the agreement date differs from the purchase date, you'll likely be subject to Long Term Capital Gains (LTCG) tax. The cost of acquisition for tax purposes should be based on the date of the agreement. This agreement date is also what you should use when calculating indexation for your LTCG tax.

Prajjwal

422 Points Posted on 06 February 2023

If the date of agreement for the flat purchase and the date of the actual purchase are different, the cost of acquisition should be determined based on the agreement date. LTCG will be applicable.