Whether Delay Interest in delayed possession is Taxable / Exempted under IT Act ?

[Rohit Sharma]

Furtherance to the order of RERA, whether the Delay Interest on account of delayed possession received by Allottee from the Promoter/Builder is Taxable under IT Act? If so, how can the exemption are availed?

AI Summary

Tax Compensation for Property Delay: Builders Must Pay Interest, Buyers Face Potential Tax Liability Under Section 56 A discussion forum explores the tax treatment of delay interest received by property buyers from builders due to delayed possession under RERA orders. The consensus is that such compensation is taxable under 'Income from Other Sources' under Section 56 of the Income Tax Act. While no blanket exemption exists, potential tax strategies include claiming standard deductions, reporting on receipt basis, and potentially spreading the interest over multiple years depending on specific circumstances.