• Self occupied capital gains

I entered into a jda on october 2017.i will receive 10 flats and builder will receive 10 flats.market value 3.60 cr for my full share of 10 flats.if i sell 7 flats for around 2.5cr and buy one flat for self occupation worth 2.5 cr and retain remaining 3 flats do i need to pay capital gains tax on the 7 flats.remaining 3 flats i will not sell and give on rent.and am i liable for gst.
Asked 1 year ago in Capital Gains Tax from Kolkata, West Bengal

Hi,

If you are selling all the 7 flats for 2.5 crore and investing the capital gain amount in new residential property within given timeline, then you will be eligible for exemption u/s 54.

You will not be required to pay capital gain.

Abhishek Dugar
CA, Mumbai
3576 Answers
173 Consultations

5.0 on 5.0

From the above calculation and according to the calculation made what is come to know is that you are going to get 10 flats valuing 3.6 crore, so first of all you will have to pay capital gain on such transaction, if any.

Secondly when you will sell 7 flats for 2.5 crores its cost of acquisition according to above question comes to 2.52 crores (3.6/10*7), therefore technically you are having a short term capital loss in the above transaction and thus you will not have to pay any capital gain tax. Even if you have capital gain by selling such flats purchasing a flat for self occupation won't save your tax as you are already holding 3 flats so you won't be able to take benefit of section 54.

Regarding GST if you provide flat on rent and if you are having yearly turnover of around 20 lakh then you will have to get registered under GST and pay it accordingly.

If you find above answer helpful do give 5 and give your valuable feedback so that I can improve.

Thank you

Naman Maloo
CA, Jaipur
2291 Answers
19 Consultations

5.0 on 5.0

No, you don't need to pay capital gain tax on these 3 flats if the Construction is completed within 3 years.

Further, you can sale these flats for three years.

Abhishek Dugar
CA, Mumbai
3576 Answers
173 Consultations

5.0 on 5.0

You must have entered into a joint development agreement and getting 10 flats in exchange of giving rights in land on which building is constructed so you will have to pay capital gain on all 10 flats i.e. Sale value of 10 flats I.e. 3.6 croroe less cost of your land and then when you sell 7 flats capital gain would be calculated on 7 flats i.e. 2.5 crore less cost of acquisition of 7 flats i.e. 2.52 crores as calculated above.

No capital gain to be calculated on 3 flats as you are not selling it.

Hope this helps. If you find it helpful please rate my answer 5 and Provide your valuable feedback for my improvement

Thank you

Naman Maloo
CA, Jaipur
2291 Answers
19 Consultations

5.0 on 5.0

Hi,

- In case of JDA agreement, sale consideration would be treated as stamp duty value of 10 flats received from the builder and any cash from the builder.Firstly this transaction will be liable to capital gain.

- Total sales consideration of 10 flats would be 3.6 cr but you have not provided the value of land given to the builder to arrive at the figure of capital gain.

- The above provisions are applicable in the year when completion certificate will be issued.

- Sale of 7 flats further would attract capital gain again but now COA would be stamp duty value of 7 flats. Exemption would depend on the nature of the capital gain i.e. long term or not.

- Renting of 3 flats for residential purpose would not attract GST otherwise you will be liable if the turnover would exceeds Rs.20 lacs.

Thanks

Vivek Kumar Arora
CA, Delhi
3221 Answers
166 Consultations

5.0 on 5.0

Dear Sir,

Hope you are doing well !

As mentioned by you, if you are selling the 7 flats for around 2.5cr and buy one flat for self occupation worth 2.5 cr

timely , then you will not be liable to for any capital gain tax.

You will be eligible for exemption u/s 54.

Thanks & Regards,

Payal Chhajed

Payal Chhajed
CA, Mumbai
3244 Answers
41 Consultations

5.0 on 5.0

For remaining flats , again you will not be liable for any capital gain provided the construction is completed within 3 years.

Thanks & Regards,

Payal Chhajed

Payal Chhajed
CA, Mumbai
3244 Answers
41 Consultations

5.0 on 5.0

Dear Sir,

Capital Gains are to be paid only on sale of flats. Capital Gains need not be paid for the flats you retain.

Praneeth Thunuguntla
CA, Guntur
51 Answers
1 Consultation

Not rated

Hi,

If the entire capital gains is reinvested in a new residential property, you will not be liable to any capital gains tax u/s 54.

Regards,

Nikhil.

Nikhil Khanna
CA, Mumbai
1428 Answers
19 Consultations

4.8 on 5.0

No, you don't need to pay capital gain tax on the 3 flats.

Nikhil Khanna
CA, Mumbai
1428 Answers
19 Consultations

4.8 on 5.0

Dear Sir,

If the entire long term capital gains is reinvested in a new residential property, you will not be liable for any capital gains tax according to section 54.

Karishma Chhajer
CA, Jodhpur
1375 Answers
8 Consultations

5.0 on 5.0

No, you do not need to pay any capital gain tax on remaining flats as you are not selling it.

Karishma Chhajer
CA, Jodhpur
1375 Answers
8 Consultations

5.0 on 5.0

Hi,

Yes, you will be liable for GST.

If you invest the entire sale proceeds in one residential house Property, your entire capital gain will be exempt.

Lakshita Bhandari
CA, Mumbai
3848 Answers
190 Consultations

5.0 on 5.0

Sorry, there was a typo in the above answer.

I meant "Further, you can't sale these flats for three years."

Abhishek Dugar
CA, Mumbai
3576 Answers
173 Consultations

5.0 on 5.0

Hi

If Entire capital gain is reinvested then no capital gain tax liability arises.

You need not to pay capital gain on 3 flats.

Gst on renting will arise if your turnover exceeds 20 lacs.

Swati Agrawal
CA, Mumbai
1146 Answers
7 Consultations

5.0 on 5.0

Capital Gains comes into picture only if there is a transfer of property.

For JDA, there will be Capital Gain Tax in 2 phases. First, for transferring your share in land, there will be Capital Gain on that (It will be LTCG if you have held the land for at least 24 months. Otherwise, Short-term). This Liability arises in the Year in which the Construction is complete and occupancy certificate is received.

Second, as and when your share of Flats are sold, there will be Capital Gain. The period of holding for the flat will be considered from the date of Occupancy Certificate. If this period is within 24 months, it will be Short-term Gain. Otherwise, it will be Long-term gain

Pradeep Bhat
CA, Bengaluru
477 Answers
39 Consultations

5.0 on 5.0

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