Multiple flats received under JDA

Multiple flats received under JDA

Hi, 
Below are the queries I have.
1. Entered into JDA in Nov-2022 of inherited ancestral property.
2. Received CC/OC from authorities in April 2025.
3. Builder handed over total 8 flats to us after receiving OC/CC
4. The ready reckoner rate for each flat is about 33.4L.
5. We intend to sell all 8 Flats for about 40L.
As per my understanding 

"The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) has held that the capital gain exemption under section 54F of the Income Tax Act, 1961 is available to multiple flats obtained by the assessee under a joint development agreement (JDA)"

I would like to know what will be the LTCG /STCG if we sell all 8 flats.
Regards,
Sushant

Asked 4 days ago in Capital Gains Tax

Capital Gains Tax Summary – JDA with 8 Flats

1. Land Transfer under Section 45(5A)

Trigger: OC received in April 2025 → taxable in FY 2025–26

Type: LTCG (inherited land)

Value: ₹33.4L × 8 = ₹2.672 Cr

Indexed Cost: Say ₹50L (example)

Tax Options:

Option A: 20% with indexation

Option B: 12.5% without indexation (new optional regime)

Choose whichever results in lower tax. Indexation may be better if land was acquired before 2001.

2. Sale of Flats

If sold before April 2027:

Short-Term Capital Gain (STCG) = ₹6.6L × 8 = ₹52.8L

Taxed at your slab rate (up to 30%)

If held >24 months:

LTCG eligible

Taxed at:

20% with indexation, or

12.5% without indexation (new optional rate)

3. Section 54F Exemption

Allowed only for 1 residential unit (post-2014 law)

Selling within 3 years revokes exemption

Shubham Goyal

CA, Delhi

451 Answers

12 Consultations

Talk to Shubham Goyal

Hi ,
Thank you for your reply, But pls refer to multiple judgements given by both ITAT and Courts which have have allowed exemption under 54F, treating all flats as single unit.

https://indiankanoon.org/doc/4159684/

https://www.taxscan.in/itat-allows-deduction-claimed-u-s-54f-of-income-tax-act-with-respect-all-apartment-units-received-pursuant-to-jda/400819/

2020 (11) TMI 699 - AT - Income Tax


pls check and clarify.
Regards

Asked 4 days ago

Hi,

Thank you for sharing the judgments. Yes, multiple ITAT and High Court rulings (like the ones cited) have allowed Section 54F exemption for multiple flats received under a JDA, treating them as one residential unit, especially when:

Flats are in the same building

Have common use or layout

Intended for use by one family

However, post-2014, law technically allows exemption for only one unit, so this position may be challenged by the AO.

Conclusion: You can claim Section 54F for all flats as one unit if facts support it, but keep strong documentation and be prepared for possible scrutiny.

Shubham Goyal

CA, Delhi

451 Answers

12 Consultations

Talk to Shubham Goyal

Hi,

In case of JDA , the Section 45(5A) is very clear and deals specifically in cases of redevelopment

Cost of acquisation- Defined.
----------------------------------
Section 49(7): COA of capital asset being share in the project under section 45(5A)
The COA of share in joint development agreement will be the sum of the stamp duty value of the land/building on the date of completion certificate is issued plus cash consideration received for the transfer of share in project.

COA = Stamp Duty Value on Completion Date + Cash Consideration

So we gave our house + land which was more than 35 yrs old in dilapilated condition to a builder for development, as per registered agreement he gave it back to us in an improved condition after recieving OC from concerned authority.

So we got back possesion what we gave him in an improved condition.This offset can be done as per 54(f) The ownership of land is still ours.

The old Cost of acquisation before 2001 or as of 1.4.2001 is now history since the old structure was demolished and a new one constructed and OC recieved.

So,now since the house is in improved condition the new cost of Cost of acquisation is the Circle rate on the day of issue of completion certificate which is clearly defined.

So after getting possesion of our unit/units they are completely in our possesion like prior to the JDA.

what we do with them thereafter will determine the LTCG or STCG.

If we keep them for 3 years and sell, it will attract LTCG with COA as new one recieved during OC.

If we sell them before 3 year ,we will have to pay STCG with COA as new one recieved during OC.

For your ref pls check the below discussion , which is very clear on this.

Regards,

https://www.google.com/search?q=capital+gain+on+owner+flats+in+case+of+development+agreement&sca_esv=61d23f7bcc33af33&rlz=1C1GCEA_enIN1126IN1126&udm=7&biw=1280&bih=673&ei=Ip3bZ_aSNtKa4-EPu8nAgQg&oq=capital+gain+on+owner+flats+in+&gs_lp=EhZnd3Mtd2l6LW1v

Asked 2 days ago

Section 45(5A) applies – capital gains arise in the year of OC (April 2025).

COA (Cost of Acquisition) as per Section 49(7):
- COA = Stamp Duty Value (SDV) of the land on OC date + any cash received from builder.
- Not the historical cost or FMV as of 2001.

Capital Gain on Transfer of Land to Builder:
- Deemed consideration = SDV of flats received (₹33.4L × 8).
- LTCG taxed @ 20% with indexation or 12.5% without (optional regime).

Capital Gain on Sale of Flats:
- If sold within 24 months → Short-Term Capital Gains (STCG), taxed at slab rate.
- If sold after 24 months → Long-Term Capital Gains (LTCG), taxed @ 20% with indexation or 12.5%.

Section 54F Exemption:
- Possible if flats used as single residential unit.
- AO may challenge — maintain strong documentary support.

Shubham Goyal

CA, Delhi

451 Answers

12 Consultations

Talk to Shubham Goyal

Ask a Chartered Accountant

Get tax answers from top-rated CAs in 1 hour. It's quick, easy, and anonymous!

Ask a CA

Multiple flats received under JDA

Capital Gains Tax Summary – JDA with 8 Flats

1. Land Transfer under Section 45(5A) Trigger: OC received in April 2025 → taxable in FY 2025–26 Type: LTCG (inherited land) Value: ₹33.4L × 8 = ₹2.672 Cr Indexed Cost: Say ₹50L (example)

2. Sale of Flats If sold before April 2027: Short-Term Capital Gain (STCG) = ₹6.6L × 8 = ₹52.8L Taxed at your slab rate (up to 30%) If held >24 months: LTCG eligible Taxed at: 20% with indexation, or 12.5% without indexation (new optional rate)

3. Section 54F Exemption Allowed only for 1 residential unit (post-2014 law) Selling within 3 years revokes exemption

Ask a Chartered Accountant

1. Land Transfer under Section 45(5A)

Trigger: OC received in April 2025 → taxable in FY 2025–26

Type: LTCG (inherited land)

Value: ₹33.4L × 8 = ₹2.672 Cr

Indexed Cost: Say ₹50L (example)

2. Sale of Flats

If sold before April 2027:

Short-Term Capital Gain (STCG) = ₹6.6L × 8 = ₹52.8L

Taxed at your slab rate (up to 30%)

If held >24 months:

LTCG eligible

Taxed at:

20% with indexation, or

12.5% without indexation (new optional rate)

3. Section 54F Exemption

Allowed only for 1 residential unit (post-2014 law)

Selling within 3 years revokes exemption