| Question And Answer | |
|---|---|
| Subject: | Redevelopment and PAAA registration from LTCG perspective |
| Category: | Income-Tax |
| Querist: | Komal |
| Answered by: | Law Intern |
| Tags: | Capital Gains, redevelopment |
| Date: | September 29, 2025 |
My spouse and I had purchased a 1BHK flat measuring 355 sq ft in Mumbai in Feb 2024. Our building is now under redevelopment and we are entitled to get a flat of 472 sq ft. In the meanwhile, we had also opted to purchase an additional area of 23 sq ft, due to which we will be allotted a flat measuring 495 sq ft.
Now our developer has scheduled the PAAA registration in Oct 2025 and we will also need to make the payment for purchase of extra 23 sq ft area along with the proportionate stamp duty charges thereof
My query is that since we have purchased the flat in Feb 2024 and we will doing the PAAA registration in Oct 2025, will we be subject to short term capital gains because we are buying additional 23 sq ft area.
Should we defer our PAAA registration until Feb 2026 so as to complete the holding period of 24 months and qualify for LTCG. Kindly note that we are not selling our flat to any other person. This PAAA registration of the flat is on account of the new flat that we will get instead of the old flat due to redevelopment.
The purchase of the extra 23 sq ft does not trigger a separate capital gains event. Even without the purchase, there is a “transfer” u/s 45(5A) and short-term capital gains are taxable. However, deferral to February 2026 is desirable because this would make the original flat a long-term capital asset and qualify the gain for Section 54 exemption.