- In F.Y. 2020-21
Long term capital gains
I have sold my Mumbai flat on 2-3-20 vide Agreement for Sale Registered in mumbai on 2-3-20 Agreement Value is 1.15 Cr . Amount Recd only 3.5 Lakhs in [deleted] period . Still Sale Deed not Registered . Balance Payments still not received of 1.11 Cr . QUERY Whether i have to pay Long term Gains in 2019 -20 period as Agreement to sale was Registered or i have to pay Long term Tax to Income tax in 2020-2021 period as till December 2020 Sale Deed is not registered & Also Balance payments is still not received by me due to Buyer bank disbursements still not done to me . Kindly guide in which period i have to pay Long term tax on above facts in 2019-20 or 2020-2021 when i register Sale deed & i receive balance payments in [deleted] . PAWAN SUREKA
Asked 3 years ago in Capital Gains Tax
Dear Sir,
Hope you are doing well !!
It would be taxable in FY 2020-21.
Long term capital gains arises when there is a transfer of property. The transfer takes place when the buyer gets the legal or beneficial ownership of the property. In your case, if you have allowed the buyer possession of the property after the agreement for sale dated 2-3-20, prima facie, it can be taken to be as a transfer, even if you have not registered the sale deed and did not receive the consideration in full. Thus if you've not given possession of the house, then there is no transfer.However, if you have given possession, prima facie, there is a transfer but you need to evaluate other factors.
Generally agreements for sale have a clause for forfeiture of advance if the consideration is not paid or registration is not done within a specific time frame. Is there any such clause in the agreement for sale? If there is such clause in the agreement, you may invoke this clause and cancel the agreement for sale. Further there is no transfer as the transaction is not complete, even the possession was handed over to the prospective buyer.
Even if such clause is not there, you may issue a notice to the prospective buyer to pay the balance amount within a specified period as a reasonable time has already elapsed. Thus you can effectively have documentary evidence that the transfer did not take place in FY 2019-20, even if possession was handed over to the prospective buyer.
Now the transfer is complete only when the consideration is paid and the sale deed is registered. The capital gains arises in the FY 2020-21, if the transaction is completed latest by 31st March 2021. Otherwise, it may be in the next year also.
Hi
In F. Y. 2020_21
No tax in 2019-20.
Pay tax in year in which you register deed or transfer possession if deed is not made.
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Hi
Capital gains shall be taxable in the financial year 20-21 when registration of the property would be done.
Capital Gain will be applicable when you receive the sale consideration. Registration of deed is not considered.
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