| Question And Answer | |
|---|---|
| Subject: | CGT on sale of redeveloped Flat |
| Category: | Income-Tax |
| Querist: | Ganesh Alawani |
| Answered by: | Law Intern |
| Tags: | redevelopment |
| Date: | November 25, 2025 |
I pitched a flat in a society in 2006 for 50 lacs.
In May 2023 , development agreement was signed with developer declaring total society consideration as 9 crores for 10 members.
The redeveloper gave possession of flat in Nov 2025 with 30% extra area.
I purchased a flat I
Under construction in june 2025 which I will get possession in oct 2027.
I want to sale the preset flat now.
What are CGT implications for me.
(i) The redevelopment is itself a transfer taxable in the year in which the possession of the redeveloped flat is given. It will be a LTCG as the old flat was held for more than 24 months. The stamp duty value of the new flat will be deemed to be the consideration for the transfer. You are entitled to indexation of the cost of acquisition of the old flat.
If there is any capital gain, you are entitled to the benefit of section 54 as you will get possession of the under-construction flat within 2 years of the transfer.
Note: If the under-construction flat was not there and if you had claimed section 54 exemption on the capital gain on the old flat against the redeveloped flat, that exemption would be revoked as you are selling the redeveloped flat.
(ii) The sale of the redeveloped property will be taxable as a STCG as it is held for less than 24 months. The FMV on the date of possession will be deemed to be the cost of acquisition.