03 February 2013
Mr.X had acquired a land in the year 1990 to set up a manufacturing plant which was permanently closed in the year 2008 thereafter in the year 2009 an agreement was made with a builder M/S ABC Developer Pvt. Ltd. for constructing a residential complex in the same land owned by Mr.X. The construction of residential complex was finished on February 2012 and Mr.X received certain number of flats from M/S ABC Developer Pvt. Ltd. as a consideration against the land which was given to the developer for constructing the residential complex. Mr.X sold all the flats on December 2012 and earned good amount of Capital gain. I want to know that the Capital Gain earned by Mr.X will be considered as Short Term Capital gain or Long Term Capital Gain and what will be the rate of tax paid by Mr.X.
03 February 2013
Long term for the land.. And short term for the construction portion.: You'll have to bifurcat the cost of flat into the land and construction cost..
Alternative: you can make the land as stock in trade when the builder started making the flats.. Pay LTCG on land and PGBP on the sale of flats..
CAclubindia
