• Sale of redeveloped apartment in Mumbai

Hi Could you please guide me on the following Capital Gains Scenario: I have an apartment in Mumbai in Joint name with my brother. My brother is an Indian citizen and is a resident of India. I am an OCI (Overseas Citizen of India) and non-resident of India with an Australian Passport. The apartment was transferred to us as part of our father's will. It was originally acquired in August 1976. The property's original carpet area was 745 square feet. The property is being redeveloped with just redevelopment rights given to the builder. The builder has given 200 square feet carpet area free as part of the redevelopment giving a total of 945 square feet of carpet area. The redevelopment agreement was signed with the Society for redevelopment rights only on 23 May 2021 and individual agreement with the developer was signed on 6th September 2022. The property value as on 1 April 2001 was ₹40,58,000. The expected sale price in July 2024 is ₹4,72,50,000. The property is expected to be handed over complete in June 2024. If we were to sell the property immediately after taking possession say in July 2024, what would be the capital gains tax implications? Would it be treated as Long Term Capital Gain? What would be the tax payable? How much TDS will be deducted for me as a non-resident and how much TDS would be deducted for my brother who is a resident of India
Asked 16 days ago in Capital Gains Tax

  1. Capital Gains Tax:

    • Since the property was originally acquired in 1976 and considering the redevelopment agreements, the sale will be treated as a long-term capital gain.
    • Long-term capital gains (LTCG) are taxed at 20% with indexation benefits.

  2. Tax Deducted at Source (TDS):

    • For You (NRI):

      • TDS is 20.8% (including surcharge and cess) on the sale proceeds.

    • For Your Brother (Resident Indian):

      • TDS is 1% on the sale proceeds.

  3. Additional Tax Considerations:

    • If the TDS exceeds the actual tax liability, you can apply for a refund at the end of the financial year.
    • Alternatively, you can apply for a certificate for lower TDS before executing the sale agreement.

  4. Exemptions:

    • Consider reinvesting the capital gains in specified bonds (Section 54EC) or another residential property (Section 54) to avail of tax exemptions.

For detailed, personalized advice, consider a phone consultancy.

Hope you find the information helpful. You are free to contact me for further discussion.If you could spare two minutes of your time to write a review, It would be really grateful and very happy to read it.

Thank you.

Shubham Goyal

Shubham Goyal
CA, Delhi
238 Answers
4 Consultations

5.0 on 5.0

- As the property is inherited by you and your brother, share of each in the property would be 50%

- It would be a long term capital gain

- In case of NRI, tax rate would be 23.92% on the sale consideration amount. You can take assistance of professional for filing of lower TDS deduction certificate. The entire process is online

- In case of resident, TDS rate would be 1% of the sale consideration amount. As the total income exceeds Rs. 50 lacs, he needs to disclose assets and liabilities details under Schedule AL

- Sale consideration amount can not be lower than the stamp duty value

- Expenses incurred wholly and exclusively for the purpose of transfer are deductible

- As the CII for F.Y. 2024-25 has not yet been notified, assuming it to be 365. Basis on that, LTCG would be Rs.3.24 cr approx.

- Is there any loan availed for the property to be sold? 

- Is there any cost of improvement incurred on the property?

- You can reinvest the capital gain amount in the residential property or in capital gain bonds upto Rs. 50 lacs

- For repatriation of proceeds you need to file Form 15CB and 15CA

- TDS credit will be set off against the total tax liability


For detailed discussion you may opt for phone consultation

Vivek Kumar Arora
CA, Delhi
4863 Answers
1052 Consultations

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