Joint Development Agreement of Land

[Guest]

Dear Sirs

Mr Vinod Kumar had 1500 Sq metre land as a form house in Bhopal. Mr Vinod Kumar had a Joint Development Agreement with a builder in Dec 2013 to construct 9 duplex houses .65% of the developed property will be of the builder and the builder sold 4 units .35% of the units are (Practically 3) are for Mr Vinod Kumar , the land owner. All the expenses were born by the builder including the permission formalities. The project is about to completion. The builder wants to hand over my share (35%) to Mr Vinod Kumar now. As the agreement to our family one unit will be gifted to his sister and one unit to his brother, the remaining one unit will for Mr Vinod Kumar . He is not going to sell this . The builder had given advance of ₹ 51000/- as the signing amount (To be refund at the end of project to Builder) What will be his tax liabilities on possession of houses in the form of capital gain,GST or any other duties?

UKDiwan

[RAJA SWAMINATHAN]

Capital gain is Payable on the Fair Market Value of the Houses given to the Landowner less the cost of acquiring the 65% land given to Builder. The year of taxation under capital gain is the year in which the property is transferred.

[Guest]

Please refer to the reply Submitted by: RAJA SWAMINATHAN

Title: - Joint Development Agreement of Land

The Reply:-

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Capital gain is Payable on the Fair Market Value of the Houses given to the Landowner less the cost of acquiring the 65% land given to Builder. The year of taxation under capital gain is the year in which the property is transferred.

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Which time the cost of acquiring the 65% land given to Builder is to be calculated? At the time of possession of house or JDA date or any other?

AI Summary

Capital gain on joint development: fair market value of allotted houses minus cost of land, taxed in year of transfer. Capital gain is triggered when a landowner under a joint development agreement receives constructed houses; the taxable gain equals the fair market value of the houses allotted to the landowner less the cost of acquisition attributable to the 65% land interest transferred to the builder. The year of taxation for that capital gain is the year in which the property is transferred to the landowner (the year of transfer/possession).