Quick Summary
The Central Board of Direct Taxes (CBDT) has issued a detailed Office Memorandum dated September 15, 2025, outlining best practices and a Standard Operating Procedure (SOP) for assessing capital gains arising from Joint Development Agreements (JDAs) under Section 45(5A) of the Income Tax Act, 1961. With the objective to standardize the approach for identifying and verifying cases to ensure compliance and revenue collection, this office memorandum outlines the provisions of Section 45(5A) of the
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FAQ :
The purpose of the new SOP is to standardise the approach for identifying and verifying cases of capital gains arising from Joint Development Agreements (JDAs) under Section 45(5A) of the Income Tax Act, 1961, to ensure compliance and revenue collection.
Section 45(5A) was introduced to address the hardship of landowners being taxed on JDAs in the year of agreement, even without receiving property or payment. It now charges capital gains tax in the year the completion certificate for the project is issued.
The SOP involves using RERA/HIRA websites to find registered projects under JDAs, cross-referencing these with tax returns filed by landowners, and verifying if capital gains have been correctly disclosed.
If capital gains are not disclosed, a summons under Section 131(1A) of the Act may be issued to the landowner to obtain their explanation and supporting documents.
Yes, the successful methodology developed in the Kolkata Charge is being shared as a best practice that can be adopted as a standard operating procedure on a pan-India level.
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