Registered Agreement to sale has been executed in FY 2021-22 and possession of the immovable property has been given to the transferee.
But consideration will be received in installments in next 5 years and final conveyance will be executed after full payment has been received.
In which year will the transfer be considered?
In FY 2021-22 or in the year in which final conveyance will be executed?
Determining Tax Year for Property Transfer: Agreement and Possession Year or Upon Final Payment Completion? A discussion on the transfer of immovable property raised a query regarding the fiscal year in which the transfer should be considered for tax purposes. The property was transferred in FY 2021-22, with possession given but payment to be received in installments over five years, and the final conveyance to be executed after full payment. One response suggested that the transfer should be recognized in the year of the agreement and possession, regardless of payment timing. Another response noted that if the unit is sold before receiving a completion certificate, it is considered a service, requiring invoicing and tax payment within 30 days of possession transfer. (AI Summary)