| Question And Answer | |
|---|---|
| Subject: | Tax Implications on Sale of Flat after PAA Agreement |
| Category: | Income-Tax |
| Querist: | Paritosh Trivedi |
| Answered by: | Advocate Shashi Ashok Bekal |
| Tags: | Power of attorney, Tenancy rights |
| Date: | March 16, 2023 |
My Great Grandfather property in Matunga, Mumbai was send to redevelopment in 2007 and my father got one flat of 1BHK including Extra FSI as a land lord in 2023. Now, We want to sell that flat immediately, What will be Tax Implications? Can we get Deduction in Sec 54, 54EC and Sec 54F? Will there be Index Cost of Acquisition? If yes how can we compute same?
We are assuming that the original property was a tenancy right which is now converted into a ownership property. The date of registration is to be considered as the date of acquisition and the stamp duty value of the property will be the cost of acquisition. Therefore, section 54 and section 54EC of the Income-tax Act, 1961 will only be available on the sale of long-term capital assets. The assessee has to accordingly hold the property.
We were Tenants in Trust property purchased by a Developer now and going for redevelopment.PAAA agreement is made now. Can we sell the property once we get the possession ? Tax to be paid in such properties ? Kindly guide
Yes. You are the owner & can sell. There will be capital gains payable on sale of the new flat which will be LTCG or STCG depending on the period of holding.
I had purchased a flat in Mumbai in 2011 now the building is gone in to redevelopment.what happens to my purchase agreement after PAAA agreement is executed. Does the PAAA agreement superseded’s my purchase agreement made in 2011.
The purchase agreement establishes your perpetual ownership rights in the society. Redevelopment does not extinguish this. It transforms your rights from the old flat to the new one in the redeveloped building. If there is a conflict between the purchase agreement and the PAAA, the PAAA may prevail as it is the later document.