Agree with first CA opinion .property has been purchased by you in 1998 ,possession has been delivered in 2000 .you should get property value as on 2001 and then calculate capital gains
LTCG on Property taken possession in 2000 but sale deed done in 2011
I purchased a property in 1998 (DDA flat) which was taken possession in 2000, it was a DDA flat for which we paid some money in 1998 (initial amount) & some amount was paid between 1998 to 2008 as a monthly installment to DDA. The property was later registered in 2011. We don't have all the receipts for the monthly payment made between 1998 to 2008, the allotment letter from DDA from 1998 mentions disposal value in it. I have reached out to two CAs and have been getting different answers, I am trying to understand which one is correct. 1.) One CA suggested, we will need to get property value in 2001 (as per circle rate or other govt agencies) & then calculate capital gains by taking CII from 2001. He said it doesn't matter if you have all previous payment receipts or not. 2.) The other CA is suggesting we can only claim capital gain from the time it was registered i.e. 2011, if we need to claim from 1998 then we will need to get all payment documents made to DDA. The first CA also suggested that we can show roughly expenditure of 70-80K every 5 years on property maintenance for reducing capital gains, he mentioned we don't need receipts for it. Could someone guide me on the best way on approaching it, and how to reduce the capital gain so I can pay as minimal tax as possible?
Asked 3 years ago in Property Law
Religion: Hindu
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7 Answers
The property vested in you in 2011 when the agreement was registered
The agreement will have the details of all the payments made prior to the registration date. So the receipts of the same will be acknowledged in the agreement itself and you do not need to produce the receipts
The indexation can be done taking 2001 as the base year as suggested by the 1st CA since the payments were made between 1998 and 2008. As regards the payments made prior to 2001 you would need a valuation report or if those amounts are not substantial then you can simply claim deduction without inflating those amounts by considering the CII
You can also claim deduction towards cost of improvement and inflate that amount too by considering the CII provided you have proof for the same if and when requisitioned by the assessing officer
So both the CAs are correct to the extent as above
For purpose of determining the holding period of the property the registration date will have to be considered
And for purpose of computing the capital gains the indexation can be done from 2001 onwards to reduce the capital gains outflow
You will have to pay the capital gains of previous years on disposal value it will be lowest and reasonable in present conditions
According to the CBDT in its circular No.471 dated 15th October, 1986 had clarified this position by holding that when an assessee purchases a flat to be constructed by Delhi Development Authority (“D.D.A.” for short) for which allotment letter is issued, the date of such allotment would be relevant date for the purpose of capital gain tax as a date of acquisition. It was noted that such allotment is final unless it is cancelled or the allottee withdraw from the scheme and such allotment would be cancelled only under exceptional circumstances. It was noted that the allottee gets title to the property on the issue of allotment letter and the payment of installments was only a follow-up action and taking the delivery of possession is only a formality. In the circular dated 16th December, 1993 the board has considered that in cases of allotment of flats or houses by co-operative societies or other institutions whose schemes of allotment and consideration are similar to those of D.D.A. may also be treated as cases
In terms of such clarifications, the date of allotment would be the date on which the purchaser of a residential unit can be stated to have acquired the property.
I have a few follow-up questions, and would really appreciate it if you can answer 1.) I currently have NRI status (still an Indian citizen), do I need to move my PAN card to International jurisdiction when filing income tax, the first CA mentions that we will simply mark Non-resident option but the second CA suggests that we will need to move to International jurisdiction for us to claim any TDS refund (my TDS is being deducted at 22% bec of NRI status). 2.) We do have some documents of some repair work that was done on flat in 2020 & 2021, the repair cost was around 7-8 lacs, the person who did the repair is providing us signed document but didn't provide any separate bills, the document mention all amount that was paid & bank account on which it was transferred. I am not sure how this person shows this income in his ITR. The first CA said we shall be able to show this to reduce capital gain while the second CA said we will need PAN card of the person and would need to ask him if he showed this as income. I am pretty sure he didn't pay GST on it since he didn't give us any bills etc. Thanks a lot for the details, your help is appreciated.
Asked 3 years ago
Yes your above observations are correct
You can mark you as non resident while filing income tax returns
2) you can show expenses incurred by you to reduce capital gains
1. The suggestion made by second CA is valid
2. You can follow the suggestion made by first C A in this regard.
You need not worry about his gst or ITR.