Question And Answer
Subject: Tax Implications on Sale of Flat after PAA Agreement
Querist: Paritosh Trivedi
Answered by:
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Date: March 16, 2023
Query asked by Paritosh Trivedi

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?

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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.

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