What are the taxes I/we have to pay?

By entering into JDA, you have impliedly sold the land and the consideration for which is recieved in form of flats from the developer.  This is why capital gains tax has to be paid on stamp duty value of the flats on the date of completion certificate recieved from CMDA less the cost of acquisition of the inherited property which is the cost to previous owner or fair market value as on 2001 if acquired prior to that.  

This stamp duty value of flats (recieved under JDA) deemed as sale consideration would become your cost for computation of capital gains as and when you sell the flats.  

To avoid incedence of tax on sale of flats, deduction can be obtained under section 54 by investing in another residential house.  There is no requirement that residential house with same UDS has to be purchased.  

Trust that above suffices.  

Thanks and Regards

Lakshay

Hello,

For the transfer of property under the Joint Development Agreement, the capital gain is chargeable on the issue of the completion certificate for the project by the competent authority. The stamp duty value on the date of issue of the said certificate would be the sale consideration. The cost of acquisition, in case the property was acquired by the previous owner before 1st April 2001, would be the fair market value of the property as on 1st April 2001.

On further sale out of the share in the JDA project, the cost of acquisition would be proportionate stamp duty value as considered above. 

For capital gain exemption, the investment can be made in another residential house property within the specified time period or under specified NHAI/REC bonds within six months from the date of transfer.

I hope this answer satisfies your requirements. 

Regards,

CA Hunny Badlani

JDA is special type of agreement wherein there are two types of transaction one where you transfer a share of land to the developers and another of sale of flats.

In normal scenario tax under first situation is to be paid after you receive completion certificate.

In such case sale consideration would be FMV of the flats received by you and cost would be original cost of land for the proportion transferred by you to the land owner.

Secondly since you have sold the flat before receiving its possession same won't be covered under this JDA arrangement and hence you need to consider as transfer of rights and pay tax on same.

Till when will you get the this construction done?

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

Thank you.

Dear Sir,

Hope you are doing well !!

Taxation under the JDA Joint Development Agreement is different as compared to normal capital gain. Here Sec. 45(5A) comes to the scenario. As per Sec. 45(5A), Capital Gain arising under JDA are taxable in the previous year in which the certificate of completion for the whole or part of the project is issued by the competent authority. And the stamp duty value, on the date of issue of the said certificate, of his share, being land or building or both in the project, as increased by the consideration received in cash, if any, shall be deemed to be the full value of the consideration received or accruing as a result of the transfer of the capital asset

Then further Capital Gain liability would arise on the sale of the floors in the year of the actual sale, Sale Consideration would be actual sale proceeds received and the cost of acquisition would be the Stamp Duty Value considered at the time of completion certificate.

For calculation of Cost of Acquisition, you need to get the valuation report from a certified engineer for your share in the property as on 1st April 2001, it would be your Cost of Acquisition. For share purchased from your brother, the cost incurred for the share be your additional cost. both the costs would be indexed using the cost inflation index, making it indexed cost of acquisition.

Regarding exemption from Capital Gain, you can invest in another house property or you can invest in specified NHAI/REC Bonds for exemption up to Rs. 50 LAkhs for a F.Y. u/s. 54EC.

Hi

After amendment in 2017  the individuals/ HUF who enters Joint Development Agreement amendment, the individuals/ HUF who enters Joint Development Agreement with the builder are liable to capital gains in the year in which the certificate of completion is issued by the competent authority. Therefore, the tax liability is postponed from the year of transfer of land to the year of completion of construction. Nevertheless, there are several practical issues involved with reference to year of taxability and application of other provisions like Sec. 54, Sec. 54F, etcgains in the year in which the certificate of completion is issued by the competent authority. Therefore, the tax liability is postponed from the year of transfer of land to the year of completion of construction. 

Capital gains will be sale considerations  (actual sale proceed) less cost of acquisition  ( stamp duty value) taxable at the time of the completion certificate. 

For exemptions you can invest in new house property or invest in NHAI / REC bonds upto 50 lakh