Hello, I am a tenant surrendering my tenancy rights to a developer in Mumbai and in lieu of the same I am receiving Permanent Alternate Accommodation (residential) in the same area. I would like to know if there will be any capital gains tax on the same. Also the builder is paying me compensation (Corpus Fund). Will I be liable to pay taxes on the corpus fund? Thanks in advance.
Hi,
The Tax Department has taken a view that tenancy rights are considered as capital asset and transfer of the same will result in capital gains. The compensation received by you along with the value of alternative accommodation will be taken as the sale consideration.
Regards,
Keerthiga Padmanabhan
M.Com., CA, LLB
Yes there will be capital Gains Tax and also tax on Corpus fund i.e. compensation.
Hello,
Yes, the transaction will be charged to tax under Capital Gain. The gains that you have made by transferring your tenancy rights as well as the Corpus Fund will be chargeable to Capital Gain Tax.
Trust this clarifies your query.
Feel free to call / get back in case of further clarifications.
Thanking You.
Regards,
Rohit R Sharma
BCOM, ACA, LLB-GEN, CERT. FAFP
Thank you for the answers. Wouldn't Section 54(F) be applicable, whereby the alternate accommodation received by me will be tax free? Also, under the same section or another, would Corpus Fund / Advance / Deposit also be tax-free?