Taxation & Reporting in ITR - Redevelopment of building

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Suraj (Querist)
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17 February 2025 Dear Sir / Madam,

I wish to know about taxation, in layman's language, in the case of the redevelopment of a building for its members. I have read a few articles, but I did not get clarity on taxation, its reporting in ITR, etc. My queries are as follows:

This building is a Pagdi building situated in Mumbai, where the tenants have come together for the redevelopment of the building. They will receive 450 sqft in exchange for their earlier 240 sqft. The building was constructed in 1945.

There are two types of tenants: A) Tenants who are not going for additional area other than what they are eligible for, i.e., 450 sqft. B) Tenants who are going for additional area beyond what they are eligible for, i.e., may go up to 600 sqft.

The development agreement is entered into on 14-02-2025. Also, note that the tenant is not selling the flat.

My questions are as follows:

1) Is the tenant required to show this transaction in their ITR for AY 2025-26 as a sale of property? If yes, what could be the cost price and sale value? Will there be any capital gain in both cases mentioned above?
2) Is the tenant required to obtain a valuation report as of 01-04-2001 and 14-02-2025?
3) If not shown in AY 2025-26, and the construction is completed after two years, say on 14-02-2027, is the tenant required to show this transaction in the ITR for AY 2027-28? What would the cost price and sale value be in this case?
4) Is the rent received from the developer for relocation to another place taxable?
5) Is any hardship allowance received taxable in the hands of the tenant?
6) Is GST payable by the tenant at any point during the entire redevelopment process?

I would be grateful if someone could clarify the above points and also provide any additional points to consider from a taxation and ITR reporting perspective.

Kindly revert.
Regards,
Suraj