Property resale Taxation

This query is : Resolved

Rajiv (Querist)
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12 May 2023 Part A: I bought a property from a builder at 1.5 crore. After 3 years I sold it at 2 crore. As the property was still under construction at the time of sale and a pending payment of Rs 40 lakhs, the buyer paid me 1.6 crore and remaining 40 lakhs would be directly paid to builder as per demand schedule.

Q. A.1 : The buyer deducted 1% TDS on 1.6 crore on my side. The argument is that since he is paying me only 1.6 crore, he would deduct TDS on amount paid to me. The remaining TDS would be deducted from the builder as and when he is making payment to builder. Is it correct to deduct TDS on 1.6 crore or should the TDS be deducted on full amount 2 crore?

Q A.2 : In Capital gain calculation what should be my buy value and sell value. I assume following. Please correct me if I am wrong
Buy Value : Indexed cost of 1.1 lakhs (Indexation based on date of payment of each installment)
Sell Value : 1.6 crore (As seller paid me only 1.6 crore and deducted TDS on same amount).

Is my calculation correct? Or do I need to show sell value as 2 crore and buy value as indexed cost of 1.5 crore

Q A.3 I want to claim exemption under section 54F. Do I need to invest 1.6 crore or 2 crore to claim full exemption?

Part B: I purchased another under construction property at price of 1.52. I paid Rs 1.26 to seller and remaining 26 lakhs to be paid to builder later. There is also expected expense of about Rs 10 lakhs for registration and Rs 15 lakhs for interiors.

Q B.1 Assuming I do not put any amount in Capital gain account, for section 54F, on what amount I can claim exemption. Is it only 1.26 that I paid to the seller or should I use 1.52 the total amount I paid to purchase the property or 1.77 total cost + expected registration cost + expected interior cost). If I show as 1.77, how things work if actual expense on registration and interior is less than 25 lakhs determined at a later date

Q. B.2 If I can not use 1.77, can I put remaining amount in capital gain account and use this account to pay for remaining amount to builder, registration cost and interior.

Q. B.3 Can I also claim 54 EC by investing in certain bonds in addition to section 54 EF

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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13 May 2023 A1 It's correct to deduct TDS on 1.6cr.
A2 your calculation is right. It's 1.1 cr.
A3 1.6 cr.
B1 it's 1.77cr.
B2 yes.
B3 yes.
The stamp duty value of sale should be 1.60 cr.