LTCG exeption in under construction project

Hello,

Answering your query pointwise as asked,

1. The RERA registration is based upon the area and number of apartments to be built. You need to check with the builder if the RERA registration is required or not. In any case, it won't affect your eligibility for exemption u/s. 54F.

2. No certificates or documents are to be submitted with the income tax return to justify your claim of exemption u/s. 54F. though you need to keep all relevant proofs relate to investment and completion certificate if required in the future in case of any query by the department. The exemption is claimed in the return by the assessee on a self assessment basis.

3. Yes.

4. Yes.

5. The main intention of the law is to get investment in residential property and on completion of the construction of the property. There case laws favoring the assessee in case the completion is not completed with the prescribed period of 3 years. Exemption stands in such cases as well.

I hope that this answer satisfies your requirements.

Regards,

CA Hunny Badlani

1. The rules under RERA differs from state to state but in general you are right. the idea was that every new project will be covered under RERA.

2. You just need to declare it in ITR. If you don't invest the money before filing ITR, you need to keep it in designated account.

3. Yes

4. Yes

5. It's litigative. Strict interpretation suggests that you will not get exemption if construction is not completed within 3 years but purposive interpretation says that you will get the exemption as money has been invested. Various courts have blessed purposive interpretation.

Hi,

1. Yes,every new project will now be mandatorily under RERA.

2. You dont need to show it to IT dept.

You just need to keep it in designated account.

3. Yes.

4.Yes.

5. To get exemption, the construction must be completed within 3 years of transfer of old property.

However, you will get the exemption as money has been invested as decided in many case laws.

All ongoing projects are compulsory to have RERA registration and if they dont have such registration then it might hamper your property registration so before providing the builder any money ask him to get RERA registered.

For now you just need to show that you have invested the money with a builder and you might get a allotment letter or agreement and that should be enough for now. If you dont invest money before filing return of income deposit the amount in capital gain account scheme account.

Yes you have to keep it.

Yes you can.

Its a debatable question and there are case laws on same.

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you.

Yes there will be a GST of 5% or 12% depending on the builder since it's an under construction property.

GST needs to paid at the time of payment or registration. Generally it's at the time of registration.

Stamp duty and registration charges at the time of registration of property.

Yes that way you will not have to pay any tax but it controversial to take benefit of stamp duty as cost because same is available is deduction u/s 80C.

Cost of improvement and indexed cost both would be shown separately.

There is no such minimum parameter also your sale value is high so chances of it coming into scrutiny is also there.

1. Yes, GST would be paid on the under-construction property.

2. GST would be paid the time of payment of consideration.

3. Yes, you will get complete exemption from LTCG. 

4. Wall construction cost as per market rates can be considered as Cost of Improvement. Both cost of acquisition of land and cost of improvement would be indexed.

It is advisable to take a phone consultation for detailed discussion.