• Need to understand the type of capital gain we need to pay

I am NRI and would like to sell my property in india.
I have made agreement with builder on 2017 and made payments in installments. Final payment has been made on 2021. The property is not registered yet.

In the above case what type of capital gain tax do i need to pay.
Asked 2 months ago in Taxation

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10 Answers

The Mumbai bench of ITAT (Income Tax Appellate Tribunal) has recently held that the date of allotment of a house – and not the date of registration — will be considered as the date of its acquisition. The ruling, thus, will help taxpayers while computing long-term capital gain on the sale of house property.

2)In fact, in January 2019, the Bombay High Court held that for computing capital gains on sale of property, the date of allotment will be considered as the date of acquisition of the property. And the Mumbai ITAT decision reiterates the principles laid down by the Bombay High Court


3) in your case it would attract long term capital gains 

Ajay Sethi
Advocate, Mumbai
87955 Answers
6207 Consultations

5.0 on 5.0

The said paras 7 and 8 from the order of the Tribunal in the case of Smt. Vandana Rana Roy read as under: “7. We have heard both the parties, perused the cited decisions and we find that there is no dispute on the facts. The only issue that is to be decided is whether date of allotment of the flat or the date of possession of the flat by the assessee should be considered as date of holding for computing the holding period of 36 moths. In alternative, the “date of registration” should be the relevant date. On perusal of the said decisions relied upon by the Ld Counsel, we find that the decisions are relevant and applicable to the  facts of the present case. The conclusion of the Hon‟ble Gujarat High Court judgment in the case of CIT vs. Jindas Panchand Gandhi reads as under: “Assessee having sold the flat allotted to him by a co-operative housing society after a period of 36 months from the date of allotment, capital gains arising to him were long-term capital gains despite the fact that the physical possession of the flat was given to the assessee much later and, therefore he was entitled to deduction from such gains as per law.”

Ajay Sethi
Advocate, Mumbai
87955 Answers
6207 Consultations

5.0 on 5.0

Long-term capital gains or losses apply to the sale of an investment made after owning it 12 months or longer.

Any profit or gain that arises from the sale of a ‘capital asset’ comes under the category ‘income’, and hence you will need to pay tax for that amount in the year in which the transfer of the capital asset takes place. In short you will only have to pay long term capital gain if you are selling the property after keeping it for 12 months.


Siddharth Jain
Advocate, New Delhi
5930 Answers
101 Consultations

5.0 on 5.0

If the property has been held by the NRI for more than 24 months immediately preceding the date of sale, the property is considered a long term capital asset in the hands of the seller, and taxable at 20% plus applicable surcharge and cess.

If the period is less than 24 months then it will be short term gain abd will be taxed as per his regular tax slab rates plus Applicable surcharge and cess

Prashant Nayak
Advocate, Mumbai
27278 Answers
88 Consultations

4.4 on 5.0

Since you have not purchased the property by a registered sale deed, you cannot be termed to have acquired the property. Therefore when there is no capital asset on your name, there is no question of paying capital gains tax.

Even if you are selling the property for which you have paid full sale consideration amount, you cannot execute the sale deed in favor of the purchaser.

Whatever income you have earned by selling thuis property would be termed as income from other sources, so you may have to pay income tax under that head only. 

The purchaser would be buying the proeprty by a tripartite agreement by a sale deed executed in his favor by the builder.

T Kalaiselvan
Advocate, Vellore
78113 Answers
1543 Consultations

5.0 on 5.0

if you do not have the registered sale deed in your name then it can be termed that you do not have title to the property that you would be desiring to sell in favor of the prospective buyer. 

In that case, you may have to first get the property registered on your name.

After that only you can sell the property as seller with clear and marketable title on your name in favor of the prospective buyer.

In that case you may have to pay  short term capital gains tax, because the acquisition of the property shall be counted from the date of registration on your name. 

T Kalaiselvan
Advocate, Vellore
78113 Answers
1543 Consultations

5.0 on 5.0

- Since, the said property has not been registered in your name even after paying the consideration amount, then you have no right to execute sale deed in the name of purchaser , and only this right is lying with builder.

- Further, you can approach the builder and request him to make changes in the Builder-Buyer Agreement and transfer the ownership rights in the purchaser name after entering into tripartite agreement. 

- As per rule the builder after collecting processing charges, can register the property in the name of purchaser.

- Hence, in this way you have no capital income from the selling any property , and then there is no question to pay the capital tax on selling the property, but you are under obligation to pay the taxes on the basis of other sources income 

Mohammed Shahzad
Advocate, Delhi
9905 Answers
121 Consultations

5.0 on 5.0

There two types capital gain tax applicable…

  1. Short term capital asset: if the property is sold after holding it for a period of 24 months. In such case, the gain is added to your total income and then income tax is calculated based on tax index bracket applicable to you. [duration for short term capital gain was 36 months prior to FY 2017-18].
  2. Long term capital gains: you need to divide cost inflation index (CII) of the year of  sale by CII of year of  purchase—multiply the product of  division with purchase price, your will get indexed cost—deduct the selling from indexed cost—you will be paying 20% capital gain tax on resultant deduction.
  3. Without going into above calculation, you can also pay 10 % of capital gain avoiding above calculation.

Ravi Shinde
Advocate, Hyderabad
2684 Answers
42 Consultations

5.0 on 5.0

holding period will be computed from possession date 

if you sell then you will incur short term capital gains at the rate at which you would have to pay income tax as per the slab in which you would fall 

so your slab will be determined based on the sale consideration 

then whatever rate is applicable to that slab, you have to pay STCG accordingly 

also the buyer has to deduct full TDS from the sale price 


Yusuf Rampurawala
Advocate, Mumbai
6882 Answers
79 Consultations

5.0 on 5.0

Dear Client,

time period will be calculated from the allotment or possession date. Long-term capital gains or losses apply to the sale of an investment made after owning it 12 months or longer.

Anik Miu
Advocate, Bangalore
4775 Answers
52 Consultations

4.9 on 5.0

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