Tax implications on landowner share in JDA is a critical aspect which needs personal attention as the margin of error is zero in this case due to high value transactions.
It is advisable to consult telephonically.
Capital gain tax and exemptions
Hello Sir/Madam, I have a question with regards to Joint development agreement (JDA). The land under consideration is 450 sq.yds bit and it was inherited from my ancestor. In 2020, via a partition deed, the ownership rights of the property has been transferred to myself and my father. Now, we are the co-owners of the above mentioned land. We have entered into a JDA with a known developer in Feb 2021, He is going to construct a 5 floor apartment in the said premises, with one 3BHK (1,450 sq.ft) and one 2 BHK (1,215 sq.ft) apartment per floor. The total area of the project would be (1,450 x 5 )+ (1,215 x 5) =13,325 sq.ft Owners’ share : Three 3bhk, two 2 BHK flats ad measuring a total of 6,780 sq.ft Explicit share of myself and my father is not mentioned in the JDA agreement. So, I guess it would be assumed as 50-50 My share: 6,780/2= 3,390 sq. Ft and the same applies to my dad Now, from the videos I watched on you-tube and doing some kind of research with known sources,let me come up with LTCG and STCG liability.. please lemme know if my calculations are correct 1. LTCG Cost of acquisition = 1,000(per sq.yds) (just an assumption because this land was purchased by my grandfather way before 1985) 1,000x450x3[Indexation]= 13,50,000 Sale consideration= 3,390 x 1,800 (stamp value per sq.ft in my area is 1,800)=61,02,000 Capital gains = 61L-13L= 48L 20% on 48L is close to 10L.. so 10L each for me and my dad.. we will have to pay 20L towards LTCG tax 2. STCG Cost of acquisition for my share (3,390 sq.ft)= 61,02,000 Sale consideration = 3,390 x 5,000 (market value per sq.ft in my area)= 1,69,50,000 Capital Gains= 1.69cr-61L= 1.08 Cr When 1cr Is added to our income, it will taxed at 30%.. so 30L would be the STCG tax liablity for myself and another 30L for my dad.. Total Tax Liablity = 20L(LTCG tax) + 60L (STCG tax) =80L Is my calculation correct? If yes, are they any ways to save tax or how will a person be eligible to get exemption from capital gains tax? Because from the above figures, if there is no alternative to save tax, I’ll be losing out 1 apartment or even more just to pay tax to the government.
Asked 3 years ago in Income Tax
Hi
It is advisable to have a phone consultation for details discussion.
I would recommend you to book consultation as the question is a bit big and so we can discuss same in detail
Dear Sir,
Hope you are doing well !!
GST is though applicable to the supply of development rights, w.e.f.01.04.2019 the responsibility to pay tax is no more in the hands of the landowner, rather it is shifted to the builder under reverse charge mechanism (RCM). It is immaterial whether the landowner is registered under GST or not. So it can be construed that transfer of development right is not taxable in the hands of landowner w.e.f.01.04.2019. [Notification No. 13/2017-CT (R) dt. 28.06.2017 as amended by Notification No. 05/2019-Central Tax (Rate)] Dated: 29th March 2019]
In cases where landowner further sales his share of constructed area or flats allotted by the builder and he receives any amount as advance from the prospective buyers during the construction stage then the landlord will be liable to pay GST on it. No GST is applicable if such sales are made after completion of construction.
Rate of tax –
In case of further sales of area/flats by the landowner, he will be liable to pay tax @ 1% or 5% depending on the nature of the residential apartments viz: affordable or non-affordable category. However, if the developer opted for the existing system of 8%/12% then the landowner has also to opt for the same. Further, he is also entitled to claim ITC charged by the builder in both the situation (old rates and new rates) on the consideration value against the transfer of development right in land.
Time of supply-
The landowner will be liable to pay GST on receipt of advance /booking amount from the customers against sales as per provisions of section 13.
Value of supply-
The actual sales value realizable from buyers as the transaction value will be the value of supply.
We may assist you in entire procedure.
It is advisable to take a phone consultation for detailed discussion.
Hello Everyone, Hope you all are doing good!! please help me with your inputs on the following question: point 1: I am planning to buy a new house by taking home loan within 1-2 months. (FY 21-22) point 2: I entered into a JDA with a builder for an extent of 450 sqyds. The project completion certificate will be acquired by end of June 2022(FY 22-23) now my question is, Can i use the amount obtained by selling my share of flats to close the home loan i am taking now & in the process, can i claim capital tax exemption by stating that the funds were used to buy another residential property? Awaiting your response Thanks & Regards
Asked 3 years ago
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